Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2018	Nov. 01, 2018
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Trading Symbol	GOGO
Entity Registrant Name	Gogo Inc.
Entity Central Index Key	0001537054
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		87,458,431

Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 102,664	$ 196,356
Short-term investments	88,575	212,792
Total cash, cash equivalents and short-term investments	191,239	409,148
Accounts receivable, net of allowances of $756 and $587, respectively	146,172	117,896
Inventories	209,734	45,543
Prepaid expenses and other current assets	32,490	20,310
Total current assets	579,635	592,897
Non-current assets:
Property and equipment, net	506,703	656,038
Goodwill and intangible assets, net	84,130	87,133
Other non-current assets	77,994	67,107
Total non-current assets	668,827	810,278
Total assets	1,248,462	1,403,175
Current liabilities:
Accounts payable	31,911	27,130
Accrued liabilities	184,912	201,815
Deferred revenue	34,815	43,448
Deferred airborne lease incentives	25,877	42,096
Current portion of capital leases	1,233	1,789
Total current liabilities	278,748	316,278
Non-current liabilities:
Long-term debt	1,018,011	1,000,868
Deferred airborne lease incentives	129,865	142,938
Other non-current liabilities	83,119	134,655
Total non-current liabilities	1,230,995	1,278,461
Total liabilities	1,509,743	1,594,739
Commitments and contingencies (Note 12)
Stockholders' deficit
Common stock, par value $0.0001 per share; 500,000,000 shares authorized at September 30, 2018 and December 31, 2017; 87,576,549 and 87,062,578 shares issued at September 30, 2018 and December 31, 2017, respectively; and 87,458,431 and 86,843,928 shares outstanding at September 30, 2018 and December 31, 2017, respectively	9	9
Additional paid-in-capital	911,341	898,729
Accumulated other comprehensive loss	(2,768)	(933)
Accumulated deficit	(1,169,863)	(1,089,369)
Total stockholders' deficit	(261,281)	(191,564)
Total liabilities and stockholders' deficit	$ 1,248,462	$ 1,403,175

Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Allowances on accounts receivable	$ 756	$ 587
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	87,576,549	87,062,578
Common stock, shares outstanding	87,458,431	86,843,928

Unaudited Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenue:
Total revenue	$ 217,257	$ 172,874	$ 676,540	$ 511,080
Operating expenses:
Cost of service revenue (exclusive of items shown below)	69,476	67,854	218,073	201,794
Cost of equipment revenue (exclusive of items shown below)	53,960	15,326	170,603	41,623
Engineering, design and development	30,018	31,313	88,204	103,262
Sales and marketing	13,963	16,294	45,291	47,253
General and administrative	24,860	24,064	71,152	70,162
Depreciation and amortization	32,590	35,824	100,447	96,821
Total operating expenses	224,867	190,675	693,770	560,915
Operating loss	(7,610)	(17,801)	(17,230)	(49,835)
Other (income) expense:
Interest income	(903)	(683)	(3,307)	(1,999)
Interest expense	30,743	27,585	91,938	81,754
Other (income) expense	72	228	(59)	322
Total other expense	29,912	27,130	88,572	80,077
Loss before income taxes	(37,522)	(44,931)	(105,802)	(129,912)
Income tax provision (benefit)	195	350	(3,459)	945
Net loss	$ (37,717)	$ (45,281)	$ (102,343)	$ (130,857)
Net loss attributable to common stock per share-basic and diluted	$ (0.47)	$ (0.57)	$ (1.28)	$ (1.65)
Weighted average number of shares-basic and diluted	80,196	79,543	79,948	79,340
Service [Member]
Revenue:
Total revenue	$ 160,376	$ 153,347	$ 470,110	$ 453,918
Product [Member]
Revenue:
Total revenue	$ 56,881	$ 19,527	$ 206,430	$ 57,162

Unaudited Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Statement of Comprehensive Income [Abstract]
Net loss	$ (37,717)	$ (45,281)	$ (102,343)	$ (130,857)
Currency translation adjustments	378	655	(1,835)	1,145
Comprehensive loss	$ (37,339)	$ (44,626)	$ (104,178)	$ (129,712)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Operating activities:
Net loss	$ (102,343)	$ (130,857)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization	100,447	96,821
Loss on asset disposals, abandonments and write-downs	8,103	7,540
Gain on transition to airline-directed model	(21,551)
Deferred income taxes	(3,866)	737
Stock-based compensation expense	12,531	15,007
Amortization of deferred financing costs	3,143	2,718
Accretion and amortization of debt discount and premium	14,000	13,872
Changes in operating assets and liabilities:
Accounts receivable	(28,501)	(38,130)
Inventories	(37,451)	1,645
Prepaid expenses and other current assets	(1,141)	4,928
Contract assets	(21,557)
Accounts payable	5,568	(1,246)
Accrued liabilities	13,211	21,399
Deferred airborne lease incentives	(4,040)	11,722
Deferred revenue	(2,216)	11,080
Accrued interest	(24,955)	(17,742)
Warranty reserves	5,888	84
Other non-current assets and liabilities	(7,166)	(3,787)
Net cash used in operating activities	(91,896)	(4,209)
Investing activities:
Purchases of property and equipment	(107,096)	(190,479)
Acquisition of intangible assets-capitalized software	(17,316)	(23,759)
Purchases of short-term investments	(39,323)	(213,651)
Redemptions of short-term investments	163,540	363,632
Other, net		(3,000)
Net cash used in investing activities	(195)	(67,257)
Financing activities:
Proceeds from the issuance of senior secured notes		181,843
Payment of issuance costs		(3,602)
Payments on capital leases	(1,626)	(2,340)
Stock-based compensation activity	81	(429)
Net cash provided by (used in) financing activities	(1,545)	175,472
Effect of exchange rate changes on cash	(530)	556
Increase (decrease) in cash, cash equivalents and restricted cash	(94,166)	104,562
Cash, cash equivalents and restricted cash at beginning of period	203,729	125,189
Cash, cash equivalents and restricted cash at end of period	109,563	229,751
Less: current restricted cash	1,773	500
Less: non-current restricted cash	5,126	6,873
Cash and cash equivalents at end of period	102,664	222,378
Supplemental Cash Flow Information:
Cash paid for interest	99,823	86,359
Cash paid for taxes	390	35
Noncash Investing and Financing Activities:
Purchases of property and equipment in current liabilities	14,739	46,817
Purchases of property and equipment paid by commercial airlines	5,920	7,987
Purchases of property and equipment under capital leases	279	1,174
Acquisition of intangible assets in current liabilities	959	1,100
Acquisition of intangible assets in non-current liabilities	1,375
Asset retirement obligation incurred and adjustments	$ 778	$ 778

Basis of Presentation

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Basis of Presentation

1.	Basis of Presentation

The Business - Gogo (“we”, “us”, “our”) is the global leader in providing broadband connectivity solutions and wireless in-flight entertainment to the aviation industry. We operate through the following three segments: Commercial Aviation North America, or “CA-NA,” Commercial Aviation Rest of World, or “CA-ROW,” and Business Aviation, or “BA.” Services provided by our CA-NA and CA-ROW businesses include Passenger Connectivity, which allows passengers to connect to the Internet from their personal Wi-Fi-enabled devices; Passenger Entertainment, which offers passengers the opportunity to enjoy a broad selection of in-flight entertainment options on their personal Wi-Fi enabled devices; and Connected Aircraft Services (“CAS”), which offers airlines connectivity for various operations and currently include, among others, real-time credit card transaction processing, electronic flight bags and real-time weather information. Services are provided by CA-NA on commercial aircraft flying routes that generally begin and end within North America, which for this purpose includes the United States, Canada and Mexico. CA-ROW provides service on commercial aircraft operated by foreign-based commercial airlines and flights outside of North America for North American-based commercial airlines. The routes included in our CA-ROW segment are those that begin and/or end outside of North America (as defined above) on which our international service is provided. BA provides in-flight Internet connectivity and other voice and data communications products and services and sells equipment for in-flight telecommunications to the business aviation market. BA services include Gogo Biz, our in-flight broadband service, Passenger Entertainment, our in-flight entertainment service, and satellite-based voice and data services through our strategic alliances with satellite companies.

Basis of Presentation - The accompanying unaudited condensed consolidated financial statements and notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in conformity with Article 10 of Regulation S-X promulgated under the Securities Act of 1933, as amended (the “Securities Act”). Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements and should be read in conjunction with our annual audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017 as filed with the Securities and Exchange Commission (“SEC”) on February 22, 2018 (the “2017 10-K”). These unaudited condensed consolidated financial statements reflect, in the opinion of management, all material adjustments (which include normal recurring adjustments) necessary to fairly state, in all material respects, our financial position, results of operations and cash flows for the periods presented.

The results of operations and cash flows for the three and nine month periods ended September 30, 2018 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2018.

We have one class of common stock outstanding as of September 30, 2018 and December 31, 2017.

Reclassifications - To conform with the current year presentation, certain amounts in our unaudited condensed consolidated statement of cash flows for the nine month period ended September 30, 2017 have been reclassified. Specifically, accrued airline revenue share of $1,169 thousand and current deferred rent of $207 thousand have been combined with accrued liabilities and non-current deferred rent of $543 thousand has been combined with other non-current assets and liabilities. Additionally, warranty reserves are now separately stated in its own line, which was included within accrued liabilities previously.

Transition to airline-directed model - The accounting treatment for one of our airline agreements transitioned from our turnkey model to our airline-directed model in January 2018 due to specific provisions elected by the airline that resulted in the transfer of control of the previously installed connectivity equipment. Upon transition to the airline-directed model, the net book value of all previously delivered equipment classified within property and equipment was reclassified to cost of equipment revenue. Additionally, the unamortized proceeds previously received for equipment and classified within current and non-current deferred airborne lease incentives were eliminated and included as part of estimated contract value, which was then allocated amongst the various performance obligations under the agreement. The value allocated to previously delivered equipment was immediately recognized as equipment revenue in our unaudited condensed consolidated financial statements; refer to Note 3, “Revenue Recognition,” for additional disclosures relating to the allocation of consideration among identified performance obligations. For amounts recognized in equipment revenue that were in excess of the amounts billed, we recorded current and non-current contract assets included within prepaid expenses and other current assets and other non-current assets, respectively; refer to Note 3, “Revenue Recognition,” for additional details. In connection with the transition of this airline agreement to the airline-directed model, we also established warranty reserves related to previously sold equipment that are still under a warranty period, which is included within accrued liabilities. See Note 8, “Warranties,” for additional information. This transition from the turnkey model to the airline-directed model occurred on January 4, 2018 and the total financial statement effect on our unaudited condensed consolidated balance sheet and unaudited condensed consolidated statement of operations was as follows (in thousands):


	Increase (decrease)
Unaudited condensed consolidated balance sheet
Prepaid expense and other current assets	$	6,603
Property and equipment, net		(32,716	)
Other non-current assets		18,783
Accrued liabilities		2,000
Current deferred airborne lease incentive		(13,592	)
Non-current deferred airborne lease incentive		(17,289	)
Unaudited condensed consolidated statement of operations
Equipment revenue		45,396
Cost of equipment revenue		23,845

Use of Estimates - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates the significant estimates and bases such estimates on historical experience and on various other assumptions believed to be reasonable under the circumstances. However, actual results could differ materially from those estimates.

Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2018

Accounting Changes and Error Corrections [Abstract]

Recent Accounting Pronouncements

2.	Recent Accounting Pronouncements

Revenue recognition related new pronouncements:

On January 1, 2018, we adopted Accounting Standards Codification Topic 606, Revenue From Contracts With Customers (“ASC 606”) using the modified retrospective method. As a result, we recognized the cumulative effect of initially applying ASC 606 as an adjustment to the opening balance of retained earnings as of January 1, 2018. Our historical financial statements have not been restated and continue to be reported under the revenue accounting standard in effect for those periods.

Prior to the adoption of ASC 606, equipment revenue (and related cost) under some of our CA-NA and CA-ROW segment contracts was deferred and recognized over the life of the contract as the equipment and connectivity services did not meet the requirements to be treated as separate units of accounting. Under ASC 606, these same equipment transactions qualify as standalone performance obligations and, therefore, equipment revenue (and related cost) is recognized upon acceptance by our airline customers. Adoption of the new standard did not materially affect the amount or timing of equipment revenue recognized from our BA segment. Our service revenue across all segments continues to be recognized as the services are provided to customers.

In conjunction with the adoption of ASC 606, we also adopted Accounting Standard Codification Subtopic 340-40, Other Assets and Deferred Costs – Contracts with Customers (“ASC 340-40”), which requires the capitalization of costs incurred to obtain or fulfill a contract with a customer. Prior to the adoption of ASC 340-40, we expensed all fulfillment and other costs associated with airline-directed contracts, which were comprised predominantly of costs incurred to obtain supplemental type certificates (“STCs”); these costs are now required to be capitalized and amortized to expense over the life of the contract (and are included within engineering, design and development in our unaudited condensed consolidated financial statements). Costs associated with our turnkey contracts are not eligible for capitalization under ASC 340-40 and will continue to be expensed as incurred.

The cumulative effect of the adoption of ASC 606 and ASC 340-40 to our unaudited condensed consolidated balance sheet as of January 1, 2018 was as follows (in thousands):


	Balance at December 31, 2017			Impact of ASC 606			Balances with Adoption of ASC 606
Assets
Inventories	$	45,543		$	974		$	46,517
Prepaid expenses and other current assets		20,310			603			20,913
Property and equipment, net		656,038			(5,282	)		650,756
Other non-current assets		67,107			(30,006	)		37,101
Liabilities
Current deferred revenue		43,448			(7,182	)		36,266
Other non-current liabilities		134,655			(48,378	)		86,277
Equity
Accumulated deficit		(1,089,369	)		21,849			(1,067,520	)

See Note 3, “Revenue Recognition,” for additional information.

On January 1, 2018, we adopted ASU 2016-04, Recognition of Breakage for Certain Prepaid Stored-Value Products (“ASU 2016-04”), which amends the guidance on extinguishing financial liabilities for certain prepaid stored-value products by requiring that entities that sell prepaid stored-value products recognize breakage proportionally as the prepaid stored-value product is being redeemed rather than immediately upon sale of the product. Adoption of this standard did not have a material impact on our consolidated financial statements.

All other new pronouncements:

In March 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (“ASU 2016-02”), which introduces a lessee model that records most leases on the balance sheet. ASU 2016-02 also aligns certain underlying principles of the new lessor model with those in ASC 606, the FASB’s new revenue recognition standard. Furthermore, ASU 2016-02 eliminates the required use of bright-line tests used in current GAAP for determining lease classification. It also requires lessors to provide additional transparency into their exposure to the changes in value of their residual assets and how they manage that exposure. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those annual reporting periods. ASU 2016-02 required entities to adopt the new leases standard using a modified retrospective method and initially apply the related guidance at the beginning of the earliest period presented in the financial statements. During July 2018, the FASB issued ASU 2018-11, which allows for an additional and optional transition method under which an entity would record a cumulative-effect adjustment at the beginning of the period of adoption (“cumulative-effect method”). We will adopt this guidance as of January 1, 2019 using the cumulative-effect method. We have begun implementing a new lease accounting information system and continue to evaluate the impact of the adoption of this guidance on our consolidated financial statements. We anticipate an increase in our assets and liabilities due to the recognition of the required right-of-use asset and corresponding lease obligations for leases that are currently classified as operating leases. The primary impact of ASU 2016-02 relates to our tower leases and base stations, and our leases of facilities and equipment. See Note 11, “Leases,” for further information on our lease arrangements.

On January 1, 2018, we adopted ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which amends ASC 230, Statement of Cash Flows, the FASB’s standard for reporting cash flows in general-purpose financial statements. The amendment addresses the diversity in practice related to the classification of certain cash receipts and payments including debt prepayment or debt extinguishment costs. We adopted this guidance using the full retrospective method, which did not have a material impact on our consolidated financial statements as we have historically reported debt prepayment and debt extinguishment costs in a manner consistent with ASU 2016-15.

On January 1, 2018, we adopted ASU 2016-16, Intra-Entity Transfers of Assets Other Than Inventory (“ASU 2016-16”), which removes the prohibition in ASC 740, Income Taxes, against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. This is intended to reduce the complexity of GAAP and diversity in practice related to the tax consequences of certain types of intra-entity asset transfers, particularly those involving intellectual property. Adoption of this standard did not have a material impact on our consolidated financial statements.

On January 1, 2018, we adopted ASU 2016-18, Restricted Cash – A Consensus of the FASB Emerging Issues Task Force, (“ASU 2016-18”), which amends ASC 230, Statement of Cash Flows, to clarify guidance on the classification and presentation of restricted cash in the statement of cash flows using the full retrospective method. Adoption of this standard did not have a material impact on our consolidated financial statements. See our unaudited condensed consolidated statements of cash flows for the reconciliation of cash presented in the statements of cash flows to the cash presented on the balance sheet.

On January 1, 2018, we adopted ASU 2017-09, Scope of Modification Accounting (“ASU 2017-09”), which amends the scope of modification accounting for share-based payment arrangements. The ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718, Compensation – Stock Compensation. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. Adoption of this standard did not have a material impact on our consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”), which permits entities to reclassify tax effects stranded in accumulated other comprehensive income as a result of tax reform to retained earnings. Companies that elect to reclassify these amounts must reclassify stranded tax effects for all items accounted for in accumulated other comprehensive income. ASU 2018-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. We are currently assessing the impact of ASU 2018-02 on our consolidated financial statements and related disclosures.

In June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”), which expands the scope of ASC 718, Compensation – Stock Compensation, to include share-based payment transactions for acquiring goods or services from nonemployees. ASU 2018-07 is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. We are currently assessing the impact of ASU 2018-07 on our consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (“ASU 2018-13”), which changes the disclosure requirements for fair value measurements by removing, adding and modifying certain disclosures. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. We are currently assessing the impact of ASU 2018-13 on our disclosures.

Revenue Recognition

9 Months Ended

Sep. 30, 2018

Revenue from Contract with Customer [Abstract]

Revenue Recognition

3.	Revenue Recognition

Our revenue is primarily earned from providing connectivity and entertainment services and through sales of equipment. Additionally, to a lesser extent, we earn revenue from providing ancillary services, including installation and Connected Aircraft Services (“CAS”).

We determine revenue recognition through the following steps:

•

Identification of the contract, or contracts, with a customer

•

Identification of the performance obligations in the contract

•

Determination of the transaction price

•

Allocation of the transaction price to the performance obligations in the contract

•

Recognition of revenue as we satisfy the performance obligations

For CA-NA and CA-ROW, pursuant to contractual agreements with our airline partners, we place our equipment on commercial aircraft operated by the airlines in order to deliver our service to passengers on the aircraft. We currently have two types of commercial airline arrangements: turnkey and airline-directed. Under the airline-directed model, we have transferred control of the equipment to the airline and therefore the airline is our customer in these transactions. Under the turnkey model, we have not transferred control of our equipment to our airline partner and, as a result, the airline passenger is deemed to be our customer. Transactions with our airline partners under the turnkey model are accounted for as an operating lease of space on an aircraft. See Note 11, “Leases,” for additional information on the turnkey model.

CA-NA and CA-ROW Service Revenue:

CA-NA and CA-ROW revenue consists of service revenue primarily derived from connectivity services, and, to a lesser extent, from entertainment services and CAS. Connectivity is provided to our customers using both our ATG and satellite technologies.

Airline-directed connectivity revenue:

As noted above, under the airline-directed model, the airline is our customer and we earn service revenue as connectivity services are consumed directly by the airline or indirectly by passengers.

Turnkey connectivity revenue (passenger connectivity):

Under the turnkey model, passenger connectivity revenue is generated by services paid for by passengers, airlines and third parties.

Passenger paid revenue represents point-of-sale sessions (which may be flight-based, time-based, multiple individual session packages (“multi-pack”) and subscriptions). Flight-based, time-based and multi-pack revenue is recognized when the sessions are used. Subscription revenue is recognized evenly throughout the subscription period, regardless of the number of times the customer uses the network.

Third party and airline paid revenue is generated by sales of connectivity services to airlines or third parties in sponsorship, wholesale, enterprise and roaming arrangements. Sponsorship revenue is recognized over the sponsorship term. Revenue from wholesale, enterprise and roaming arrangements is recognized as sessions are used by the passenger.

Entertainment revenue:

Entertainment revenue consists of entertainment services we provide to the airline for use by its passengers. Revenue is recognized as the services are provided to the airline.

CAS:

CAS includes, among other things, real-time credit card transaction processing, electronic flight bags and real-time weather information. Revenue is recognized as the service is provided.

BA Service Revenue:

BA service revenue primarily consists of monthly subscription and usage fees paid by aircraft owners and operators for telecommunication, data, and in-flight entertainment services. Revenue is recognized as the services are provided to the customer.

Equipment Revenue:

Equipment revenue primarily consists of the sale of ATG and satellite connectivity equipment and the sale of entertainment equipment. CA-NA and CA-ROW recognize equipment revenue upon acceptance by our airline customers. BA recognizes equipment revenue when the equipment is shipped to OEMs and dealers.

Equipment revenue also includes revenue generated by the installation of the connectivity or entertainment equipment on commercial aircraft, which is recognized when the installation is complete.

Contract price and allocation considerations:

Our CA-NA and CA-ROW airline-directed contracts contain multiple performance obligations, which primarily include the sale of equipment, installation services, connectivity services and entertainment services. For these contracts, we account for each distinct good or service as a separate performance obligation. We allocate the contract’s transaction price to each performance obligation using the relative standalone selling price, which is based on the actual selling price for any good or service sold separately to a similar class of customer, if available. To the extent a good or service is not sold separately, we use our best estimate of the standalone selling price and maximize the use of observable inputs. The primary method we use to estimate the standalone selling price is the expected cost-plus margin approach.

The contractual consideration used for allocation purposes includes connectivity and entertainment services, which may be based on a fixed monthly fee per aircraft or a variable fee based on the volume of connectivity activity, or a combination of both. Examples of variable consideration within our contracts include megabyte overages and pay-per-use sessions. We constrain our estimates to reduce the probability of a significant revenue reversal in future periods, allocate such variable consideration to the identified performance obligations and recognize revenue in the period the services are provided. Our estimates are based on historical experience, anticipated future performance, market conditions and our best judgment at the time.

A significant change in one or more of these estimates could affect our estimated contract value, and we regularly review and update our estimates and recognize adjustments under the cumulative catch-up method. Any adjustment under this method is recorded as a cumulative adjustment in the period identified and revenue for future periods is recognized using the new adjusted estimate.

As of September 30, 2018, the aggregate amount of the transaction price in our contracts allocated to the remaining unsatisfied performance obligations is approximately $1,096 million, most of which relates to our commercial aviation contracts. Approximately $218 million represents future equipment revenue that is expected to be recognized within the next one to three years. The remaining $878 million primarily represents connectivity and entertainment service revenues which are recognized as services are provided, which is expected to occur through the remaining term of the contract (approximately 5-10 years). We have excluded from this amount: all variable consideration derived from our connectivity or entertainment services that is allocated entirely to our performance of obligations related to such services; consideration from contracts that have an original duration of one year or less; revenue from passenger service on airlines operating under the turnkey model; and revenue from contracts that have been executed but under which have not yet met the accounting definition of a contract since the airline has not yet determined which products in our portfolio it wishes to select, and, as a result we are unable to determine which products and services will be transferred to the customer.

Disaggregation of revenue

The following table presents our revenue disaggregated by category (in thousands):


	For the Three Months Ended September 30, 2018
	CA-NA		CA-ROW		BA		Total
Service revenue
Connectivity	$	85,930	$	17,168	$	48,926	$	152,024
Entertainment, CAS and other		7,513		478		361		8,352

Total service revenue	$	93,443	$	17,646	$	49,287	$	160,376

Equipment revenue
ATG	$	2,518	$	—	$	20,158	$	22,676
Satellite		12,509		17,551		4,022		34,082
Other		—		—		123		123

Total equipment revenue	$	15,027	$	17,551	$	24,303	$	56,881

Customer type
Airline passenger and aircraft owner/operator	$	53,873	$	6,086	$	49,287	$	109,246
Airline, OEM and aftermarket dealer		39,336		27,146		24,303		90,785
Third party		15,261		1,965		—		17,226

Total revenue	$	108,470	$	35,197	$	73,590	$	217,257


	For the Nine Months Ended September 30, 2018
	CA-NA		CA-ROW		BA		Total
Service revenue
Connectivity	$	256,803	$	45,365	$	144,149	$	446,317
Entertainment, CAS and other		21,169		1,711		913		23,793

Total service revenue	$	277,972	$	47,076	$	145,062	$	470,110

Equipment revenue
ATG (1)	$	49,534	$	—	$	56,076	$	105,610
Satellite (1)		44,435		40,935		12,741		98,111
Other		—		—		2,709		2,709

Total equipment revenue	$	93,969	$	40,935	$	71,526	$	206,430

Customer type
Airline passenger and aircraft owner/operator	$	161,515	$	15,912	$	145,062	$	322,489
Airline, OEM and aftermarket dealer (2)		165,903		66,151		71,526		303,580
Third party		44,523		5,948		—		50,471

Total revenue	$	371,941	$	88,011	$	216,588	$	676,540

ATG and satellite equipment revenue for the CA-NA segment includes the $45.4 million related to the accounting impact of the transition of one of our airline partners to the airline-directed model. Approximately $43.4 million was included in ATG equipment revenue and approximately $2.0 million was included in satellite equipment revenue.

2)	Airline, OEM and aftermarket dealer revenue includes all equipment revenue for our three segments, including the $45.4 million accounting impact of the transition of one of our airline partners to the airline-directed model.

Contract balances

Our current and non-current deferred revenue balances totaled $58.9 million and $61.1 million as of September 30, 2018 and January 1, 2018, respectively. Deferred revenue includes, among other things, equipment, multi-packs, subscriptions and sponsorships activities.

Our current and non-current contract asset balances totaled $51.8 million and $5.1 million as of September 30, 2018 and January 1, 2018, respectively. Contract assets represents the aggregate amount of revenue recognized in excess of billings for our airline-directed contracts.

Our STC balances were $16.7 million and $7.6 million as of September 30, 2018 and January 1, 2018, respectively. We recognized $0.3 million and $0.7 million, respectively, of deferred STC costs as part of our engineering, design and development costs in our unaudited condensed consolidated statement of operations during the three and nine month periods ended September 30, 2018. As noted above, STC costs for our airline-directed contracts are capitalized and expensed on a straight-line basis over the life of the contract.

Impact of adoption of ASC 606

The following table presents the post adoption impact of ASC 606 on our unaudited condensed consolidated balance sheet and the statement of operations (in thousands):


	As of September 30, 2018
	As Reported			Impact of ASC 606			Balances Without Adoption of ASC 606
Assets
Prepaid expenses and other current assets	$	32,490		$	(11,835	)	$	20,655
Other non-current assets		77,994			66,218			144,212
Liabilities
Current deferred revenue		34,815			27,899			62,714
Other non-current liabilities		83,119			64,803			147,922
Equity
Accumulated deficit		(1,169,863	)		(24,165	)		(1,194,028	)

	For the Three Months Ended September 30, 2018
	As Reported			Impact of ASC 606			Balances Without Adoption of ASC 606
Revenue:
Service revenue	$	160,376		$	3,071		$	163,447
Equipment revenue		56,881			(18,545	)		38,336
Operating expenses:
Cost of equipment revenue		53,960			(12,478	)		41,482
Engineering, design and development		30,018			394			30,412
Net loss		(37,717	)		(3,390	)		(41,107	)

	For the Nine Months Ended September 30, 2018
	As Reported			Impact of ASC 606			Balances Without Adoption of ASC 606
Revenue:
Service revenue	$	470,110		$	11,574		$	481,684
Equipment revenue		206,430			(100,564	)		105,866
Operating expenses:
Cost of equipment revenue		170,603			(76,772	)		93,831
Engineering, design and development		88,204			1,936			90,140
Net loss		(102,343	)		(14,154	)		(116,497	)

Net Loss Per Share

9 Months Ended

Sep. 30, 2018

Earnings Per Share [Abstract]

Net Loss Per Share

4.	Net Loss Per Share

Basic and diluted net loss per share have been calculated using the weighted average number of common shares outstanding for the period. The shares of common stock effectively repurchased in connection with the Forward Transactions (as defined and described in Note 9, “Long-Term Debt and Other Liabilities”) are considered participating securities requiring the two-class method to calculate basic and diluted earnings per share. Net earnings in future periods will be allocated between common shares and participating securities. In periods of a net loss, the shares associated with the Forward Transactions will not receive an allocation of losses, as the counterparties to the Forward Transactions are not required to fund losses. Accordingly, the calculation of weighted average shares outstanding as of September 30, 2018 and 2017 excludes approximately 7.2 million shares that will be repurchased as a result of the Forward Transactions.

As a result of the net loss for the three and nine month periods ended September 30, 2018 and 2017, all of the outstanding shares of common stock underlying stock options, deferred stock units and restricted stock units were excluded from the computation of diluted shares outstanding because they were anti-dilutive.

The following table sets forth the computation of basic and diluted earnings per share for the three and nine month periods ended September 30, 2018 and 2017; however, because of the undistributed losses, the shares of common stock associated with the Forward Transactions are excluded from the computation of basic earnings per share in 2018 and 2017 as undistributed losses are not allocated to these shares (in thousands, except per share amounts):


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2018			2017			2018			2017
Net loss	$	(37,717	)	$	(45,281	)	$	(102,343	)	$	(130,857	)
Less: Participation rights of the Forward Transactions		—			—			—			—

Undistributed losses	$	(37,717	)	$	(45,281	)	$	(102,343	)	$	(130,857	)

Weighted-average common shares outstanding-basic and diluted		80,196			79,543			79,948			79,340

Net loss attributable to common stock per share-basic and diluted	$	(0.47	)	$	(0.57	)	$	(1.28	)	$	(1.65	)

Inventories

9 Months Ended

Sep. 30, 2018

Inventory Disclosure [Abstract]

Inventories

5.	Inventories

Inventories consist primarily of telecommunications systems and parts, and are recorded at the lower of cost (average cost) or market. We evaluate the need for write-downs associated with obsolete, slow-moving, and nonsalable inventory by reviewing net realizable inventory values on a periodic basis.

Inventories as of September 30, 2018 and December 31, 2017 were as follows (in thousands):


	September 30, 2018		December 31, 2017
Work-in-process component parts	$	30,080	$	35,009
Finished goods (1)		179,654		10,534

Total inventory	$	209,734	$	45,543

(1)

The increase in our inventories is primarily due to the allocation of a portion of our uninstalled airborne equipment (i.e., shipsets designated for installation under an airline-directed contract) within our CA-NA and CA-ROW segments from property and equipment, net, to inventories. Historically, all uninstalled airborne equipment for the CA-NA and CA-ROW segments was classified as property and equipment, net, as the majority of our installations were performed under our turnkey model agreements. See Note 11, “Leases” for additional information on the turnkey model treatment. As our uninstalled airborne equipment is increasingly being deployed under airline-directed model agreements, we now allocate our uninstalled airborne equipment between property and equipment, net, and inventories, based on our forecasts of estimated future installations by contract type.

Composition of Certain Balance Sheet Accounts

9 Months Ended

Sep. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Composition of Certain Balance Sheet Accounts

6.	Composition of Certain Balance Sheet Accounts

Prepaid expenses and other current assets as of September 30, 2018 and December 31, 2017 were as follows (in thousands):


	September 30, 2018		December 31, 2017
Contract assets (1)	$	9,919	$	—
Prepaid satellite services		6,241		3,360
Restricted cash		1,773		500
Other		14,557		16,450

Total prepaid expenses and other current assets	$	32,490	$	20,310

(1)

Changes between September 30, 2018 and December 31, 2017 are due to the adoption of ASC 606 and additional activity during the nine month period ended September 30, 2018. See Note 2, “Recent Accounting Pronouncements,” for additional information.

Property and equipment as of September 30, 2018 and December 31, 2017 were as follows (in thousands):


	September 30, 2018			December 31, 2017
Office equipment, furniture, fixtures and other	$	50,903		$	46,445
Leasehold improvements		44,593			42,522
Airborne equipment (1) (2)		617,795			765,652
Network equipment		201,957			199,304

	915,248			1,053,923
Accumulated depreciation (1)		(408,545	)		(397,885	)

Property and equipment, net	$	506,703		$	656,038

(1)

Changes between September 30, 2018 and December 31, 2017 relate to the accounting impact of the transition of one of our airline partner agreements to the airline-directed model (see Note 1, “Basis of Presentation,” for additional information) and the adoption of ASC 606 (see Note 2, “Recent Accounting Pronouncements,” for additional information).

(2)

Changes between September 30, 2018 and December 31, 2017 also relate to the allocation of uninstalled airborne equipment to inventory (see Note 5, “Inventories,” for additional information).

Other non-current assets as of September 30, 2018 and December 31, 2017 were as follows (in thousands):


	September 30, 2018		December 31, 2017
Contract assets (1)	$	41,901	$	—
Deferred STC costs (1)		16,723		—
Deferred cost of equipment revenue (1)		—		40,986
Restricted cash		5,126		6,873
Other		14,244		19,248

Total other non-current assets	$	77,994	$	67,107

(1)

Changes between September 30, 2018 and December 31, 2017 are primarily due to the adoption of ASC 606 and additional activity during the nine month period ended September 30, 2018. See Note 2, “Recent Accounting Pronouncements,” for additional information.

Accrued liabilities as of September 30, 2018 and December 31, 2017 were as follows (in thousands):


	September 30, 2018		December 31, 2017
Employee compensation and benefits	$	18,295	$	25,621
Airborne equipment and installation costs		22,002		44,059
Airline related accrued liabilities		30,568		13,566
Accrued interest		22,694		47,649
Accrued revenue share		14,354		17,339
Accrued satellite network costs		17,061		12,667
Warranty reserve		10,302		2,424
Other		49,636		38,490

Total accrued liabilities	$	184,912	$	201,815

Other non-current liabilities as of September 30, 2018 and December 31, 2017 were as follows (in thousands):


	September 30, 2018		December 31, 2017
Deferred revenue (1)	$	24,047	$	73,192
Deferred rent		36,562		37,354
Asset retirement obligations		9,505		9,668
Deferred tax liabilities		2,117		5,983
Other		10,888		8,458

Total other non-current liabilities	$	83,119	$	134,655

(1)

Changes between September 30, 2018 and December 31, 2017 are primarily due to the adoption of ASC 606. See Note 2, “Recent Accounting Pronouncements,” for additional information.

Intangible Assets

9 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

7.	Intangible Assets

Our intangible assets are comprised of both indefinite-lived and finite-lived intangible assets. Intangible assets with indefinite lives and goodwill are not amortized, but are reviewed for impairment at least annually or whenever events or circumstances indicate the carrying value of the asset may not be recoverable. We perform our annual impairment tests of our indefinite-lived intangible assets and goodwill during the fourth quarter of each fiscal year. We also reevaluate the useful life of indefinite-lived intangible assets each reporting period to determine whether events and circumstances continue to support an indefinite useful life. The results of our annual indefinite-lived intangible assets and goodwill impairment assessments in the fourth quarter of 2017 indicated no impairment.

As of both September 30, 2018 and December 31, 2017, our goodwill balance, all of which related to our BA segment, was $0.6 million.

Our intangible assets, other than goodwill, as of September 30, 2018 and December 31, 2017 were as follows (in thousands, except for weighted average remaining useful life):


	Weighted Average		As of September 30, 2018							As of December 31, 2017
	Remaining Useful Life (in years)		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Amortized intangible assets:
Software		2.2	$	159,512	$	(111,430	)	$	48,082	$	145,063	$	(93,523	)	$	51,540
Service customer relationship		1.6		8,081		(6,550	)		1,531		8,081		(5,788	)		2,293
Other intangible assets		5.1		3,000		(1,386	)		1,614		1,500		(1,103	)		397
OEM and dealer relationships				6,724		(6,724	)		—		6,724		(6,724	)		—

Total amortized intangible assets				177,317		(126,090	)		51,227		161,368		(107,138	)		54,230
Unamortized intangible assets:
FCC Licenses				32,283		—			32,283		32,283		—			32,283

Total intangible assets			$	209,600	$	(126,090	)	$	83,510	$	193,651	$	(107,138	)	$	86,513

Amortization expense was $6.1 million and $20.8 million, respectively, for the three and nine month periods ended September 30, 2018 and $4.9 million and $16.5 million, respectively, for the three and nine month periods ended September 30, 2017.

Amortization expense for each of the next five years and thereafter is estimated to be as follows (in thousands):


Years ending December 31,	Amortization Expense
2018 (period from October 1 to December 31)	$	6,524
2019	$	20,550
2020	$	12,829
2021	$	7,130
2022	$	2,441
Thereafter	$	1,753

Actual future amortization expense could differ from the estimated amount as a result of future investments and other factors.

Warranties

9 Months Ended

Sep. 30, 2018

Guarantees and Product Warranties [Abstract]

Warranties

8.	Warranties

We provide warranties on parts and labor related to our products. Our warranty terms range from two to five years. Warranty reserves are established for costs that are estimated to be incurred after the sale, delivery and installation of the products under warranty. The warranty reserves are determined based on known product failures, historical experience and other available evidence, and are included in accrued liabilities in our unaudited condensed consolidated balance sheets. Our warranty reserve balance was $10.3 million and $2.4 million, respectively, as of September 30, 2018 and December 31, 2017. Changes between September 30, 2018 and December 31, 2017 relate to the accounting impact of the transition of one of our airline agreements to the airline-directed model, additional activity under airline-directed models and costs associated with remediation of quality issues associated with our 2Ku technology. See Note 1, “Basis of Presentation” for additional information.

Long-Term Debt and Other Liabilities

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Long-Term Debt and Other Liabilities

9.	Long-Term Debt and Other Liabilities

Long-term debt as of September 30, 2018 and December 31, 2017 was as follows (in thousands):


	September 30, 2018			December 31, 2017
Senior Secured Notes	$	703,411		$	705,520
Convertible Notes		327,653			311,544

Total debt		1,031,064			1,017,064
Less deferred financing costs		(13,053	)		(16,196	)

Total long-term debt	$	1,018,011		$	1,000,868

Senior Secured Notes – On June 14, 2016 (the “Issue Date”), Gogo Intermediate Holdings LLC (“GIH”) (a wholly owned subsidiary of Gogo Inc.) and Gogo Finance Co. Inc. (a wholly owned subsidiary of GIH) (the “Co-Issuer” and, together with GIH, the “Issuers”), issued $525 million aggregate principal amount of 12.500% senior secured notes due 2022 (the “Original Senior Secured Notes”) under an Indenture, dated as of June 14, 2016 (the “Original Indenture”), among the Issuers, us, as guarantor, certain subsidiaries of GIH, as guarantors (the “Subsidiary Guarantors” and, together with us, the “Guarantors”), and U.S. Bank National Association, as trustee (in such capacity, the “Trustee”) and as collateral agent (in such capacity, the “Collateral Agent”). On January 3, 2017, the Issuers issued $65 million aggregate principal amount of additional 12.500% senior secured notes due 2022 (the “January 2017 Additional Notes”). The January 2017 Additional Notes were issued at a price equal to 108% of their face value resulting in gross proceeds of $70.2 million. On September 20, 2017, the Issuers, the Guarantors and the Trustee entered into the first supplemental indenture (the “Supplemental Indenture” and, together with the Original Indenture, the “Indenture”) to modify certain covenants, as discussed below. On September 25, 2017, the Issuers issued $100 million aggregate principal amount of additional 12.500% senior secured notes due 2022 (the “September 2017 Additional Notes”). The September 2017 Additional Notes were issued at a price equal to 113% of their face value resulting in gross proceeds of $113.0 million. Additionally, we received approximately $2.9 million for interest that accrued from July 1, 2017 through September 24, 2017, which was paid in our January 2018 interest payment. We refer to the Original Senior Secured Notes, the January 2017 Additional Notes and the September 2017 Additional Notes collectively as the “Senior Secured Notes.”

As noted above, on September 20, 2017, the Issuers, the Guarantors and the Trustee entered into the Supplemental Indenture to (i) increase the amount of additional secured indebtedness under Credit Facilities (as defined in the Indenture) that may be incurred by the Issuer and its Restricted Subsidiaries (as defined in the Indenture) under the Indenture by $100 million (from $75 million to $175 million in aggregate principal amount), (ii) permit the Issuer and its Restricted Subsidiaries to incur additional secured indebtedness in connection with vendor financing arrangements not to exceed $50 million in aggregate principal amount at any time outstanding and (iii) permit the Issuer and its Restricted Subsidiaries to make additional dividends or distributions to Gogo in an aggregate amount of up to $15 million during any twelve-month period to pay interest on any indebtedness or preferred stock with a maturity later than July 1, 2022. The Supplemental Indenture became effective immediately upon execution, following our receipt of consents from holders of a majority of the outstanding principal amount of the Existing Notes (excluding Existing Notes held by the Issuers or any affiliates of the Issuers) to the Supplemental Indenture and amendments to the collateral agency agreement governing the Senior Secured Notes (the “Consent Solicitation”). In connection with the Consent Solicitation, GIH paid $1.4 million in fees (“Consent Fees”) to holders of Existing Notes who validly tendered (and did not revoke) their consents prior to the expiration of the Consent Solicitation.

As of September 30, 2018 and December 31, 2017, the outstanding principal amount of the Senior Secured Notes was $690.0 million and $690.0 million, respectively, the unamortized debt premium and Consent Fees were $13.4 million and $15.5 million, respectively, and the net carrying amount was $703.4 million and $705.5 million, respectively.

Interest on the Senior Secured Notes accrues at the rate of 12.500% per annum and is payable semi-annually in arrears on January 1 and July 1, interest payments commenced on January 1, 2017 (other than the January 2017 Additional Notes, for which interest payments commenced on July 1, 2017, and the September 2017 Additional Notes, for which interest payments commenced on January 1, 2018). The Senior Secured Notes mature on July 1, 2022. The January 2017 Additional Notes and September 2017 Additional Notes have the same terms as the Original Senior Secured Notes, except with respect to the issue date and issue price, and are treated as a single series for all purposes under the Indenture and the security documents that govern the Senior Secured Notes.

We paid approximately $11.4 million, $2.0 million and $2.5 million, respectively, of aggregate origination fees and financing costs related to the issuance of the Original Senior Secured Notes, the January 2017 Additional Notes and the September 2017 Additional Notes, which have been accounted for as deferred financing costs. Additionally, as noted above, we paid approximately $1.4 million of Consent Fees, which partially offset the net carrying value of the Senior Secured Notes. The deferred financing costs on our unaudited condensed consolidated balance sheet are being amortized over the contractual term of the Senior Secured Notes using the effective interest method. Total amortization expense was $0.7 million and $2.0 million, respectively, for the three and nine month periods ended September 30, 2018, and $0.5 million and $1.6 million, respectively, for the prior year periods. As of September 30, 2018 and December 31, 2017, the balance of unamortized deferred financing costs related to the Senior Secured Notes was $10.7 million and $12.6 million, respectively, and is included as a reduction to long-term debt in our unaudited condensed consolidated balance sheet. See Note 10, “Interest Costs,” for additional information.

The Senior Secured Notes are the senior secured indebtedness of the Issuers and are:

•

effectively senior to all of the Issuers’ existing and future senior unsecured indebtedness and the Issuers’ indebtedness secured on a junior priority basis by the same collateral securing the Senior Secured Notes, if any, in each case to the extent of the value of the collateral securing the Senior Secured Notes;

•

effectively senior in right of payment to all of the Issuers’ future indebtedness that is subordinated in right of payment to the Senior Secured Notes;

•

effectively equal in right of payment with the Issuers’ existing and future (i) unsecured indebtedness that is not subordinated in right of payment to the Senior Secured Notes and (ii) indebtedness secured on a junior priority basis by the same collateral securing the Senior Secured Notes, if any, in each case to the extent of any insufficiency in the collateral securing the Senior Secured Notes;

•

structurally senior to all of our existing and future indebtedness, including our Convertible Notes (as defined below); and

•

structurally subordinated to all of the indebtedness and other liabilities of any non-Guarantors (other than the Issuers).

The Senior Secured Notes are guaranteed, on a senior secured basis, by us and all of GIH’s existing and future domestic restricted subsidiaries (other than the Co-Issuer), subject to certain exceptions. The Issuers’ obligations under the Senior Secured Notes are not guaranteed by Gogo International Holdings LLC, a subsidiary of ours that holds no material assets other than equity interests in our foreign subsidiaries. Each guarantee is a senior secured obligation of such Guarantor and is:

•

effectively senior to all of such Guarantor’s existing and future senior unsecured indebtedness and such Guarantor’s indebtedness secured on a junior priority basis by the same collateral, if any, securing the guarantee of such Guarantor, in each case to the extent of the value of the collateral securing such guarantee;

•

effectively senior in right of payment to all of such Guarantor’s future indebtedness that is subordinated in right of payment to such Guarantor’s guarantee;

•

effectively equal in right of payment with all of such Guarantor’s existing and future (i) unsecured indebtedness that is not subordinated in right of payment to such Guarantor’s guarantee, and (ii) indebtedness secured on a junior priority basis by the same collateral, if any, securing the guarantee of such Guarantor, in each case to the extent of any insufficiency in the collateral securing such guarantee; and

•

structurally subordinated to all indebtedness and other liabilities of any non-Guarantor subsidiary of such Guarantor (excluding, in the case of our guarantee, the Issuers).

The Senior Secured Notes and the related guarantees are secured by first-priority liens, subject to permitted liens, on substantially all of the Issuers’ and the Guarantors’ assets, except for certain excluded assets, including pledged equity interests of the Issuers and all of our existing and future domestic restricted subsidiaries guaranteeing the Senior Secured Notes.

The security interests in certain collateral may be released without the consent of holders of the Senior Secured Notes, if such collateral is disposed of in a transaction that complies with the Indenture and related security agreements. In addition, under certain circumstances, we and the Guarantors have the right to transfer certain intellectual property assets that on the Issue Date constitute collateral securing the Senior Secured Notes or the guarantees to a restricted subsidiary organized under the laws of Switzerland, resulting in the release of such collateral without consent of the holders of the Senior Secured Notes.

On or after July 1, 2019, the Issuers may, at their option, at any time or from time to time, redeem any of the Senior Secured Notes in whole or in part. The Senior Secured Notes will be redeemable at the following redemption prices (expressed in percentages of principal amount), plus accrued and unpaid interest, if any, to (but not including) the redemption date (subject to the right of holders of record on the relevant regular record date on or prior to the redemption date to receive interest due on an interest payment date), if redeemed during the twelve-month period commencing on July 1 of the following years:


	Redemption
Year	Price
2019		106.250	%
2020		103.125	%
2021 and thereafter		100.000	%

In addition, at any time prior to July 1, 2019, the Issuers may redeem up to 35% of the aggregate principal amount of the Senior Secured Notes with the proceeds of certain equity offerings at a redemption price of 112.500% of the principal amount redeemed, plus accrued and unpaid interest, if any, to (but not including) the date of redemption; provided, however, that Senior Secured Notes representing at least 65% of the principal amount of the Senior Secured Notes remain outstanding immediately after each such redemption.

The Issuers may redeem the Senior Secured Notes, in whole or in part, at any time prior to July 1, 2019, at a redemption price equal to 100% of the principal amount of the Senior Secured Notes redeemed plus the make-whole premium set forth in the Indenture as of, and accrued and unpaid interest, if any, to (but not including) the applicable redemption date.

The Indenture contains covenants that, among other things, limit the ability of the Issuers and the Subsidiary Guarantors and, in certain circumstances, our ability, to: incur additional indebtedness; pay dividends, redeem stock or make other distributions; make investments; create restrictions on the ability of our restricted subsidiaries to pay dividends to the Issuers or make other intercompany transfers; create liens; transfer or sell assets; merge or consolidate; and enter into certain transactions with the Issuers’ affiliates, including us. Most of these covenants will cease to apply if, and for as long as, the Senior Secured Notes have investment grade ratings from both Moody’s Investment Services, Inc. and Standard & Poor’s.

If we or the Issuers undergo specific types of change of control prior to July 1, 2022, GIH is required to make an offer to repurchase for cash all of the Senior Secured Notes at a repurchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to (but not including) the payment date.

The Indenture provides for events of default, which, if any of them occur, would permit or require the principal, premium, if any, and interest on all of the then outstanding Senior Secured Notes issued under the Indenture to be due and payable immediately. As of September 30, 2018, no event of default had occurred.

Convertible Notes – On March 3, 2015, we issued $340.0 million aggregate principal amount of 3.75% Convertible Senior Notes due 2020 (the “Convertible Notes”) in a private offering to qualified institutional buyers, pursuant to Rule 144A under the Securities Act. We granted an option to the initial purchasers to purchase up to an additional $60.0 million aggregate principal amount of Convertible Notes to cover over-allotments, of which $21.9 million was subsequently exercised during March 2015, resulting in a total issuance of $361.9 million aggregate principal amount of Convertible Notes. The Convertible Notes mature on March 1, 2020, unless earlier repurchased or converted into shares of our common stock under certain circumstances described below. Upon maturity, we have the option to settle our obligation through cash, shares of common stock, or a combination of cash and shares of common stock. We pay interest on the Convertible Notes semi-annually in arrears on March 1 and September 1 of each year. Interest payments began on September 1, 2015.

The $361.9 million of proceeds received from the issuance of the Convertible Notes was initially allocated between long-term debt (the liability component) at $261.9 million and additional paid-in-capital (the equity component) at $100.0 million, within the consolidated balance sheet. The fair value of the liability component was measured using rates determined for similar debt instruments without a conversion feature. The carrying amount of the equity component, representing the conversion option, was determined by deducting the fair value of the liability component from the aggregate face value of the Convertible Notes. If we or the note holders elect not to settle the debt through conversion, we must settle the Convertible Notes at face value. Therefore, the liability component will be accreted up to the face value of the Convertible Notes, which will result in additional non-cash interest expense being recognized in the unaudited condensed consolidated statements of operations through the Convertible Notes maturity date (see Note 10, “Interest Costs” for additional information). The effective interest rate on the Convertible Notes, including accretion of the notes to par and debt issuance cost amortization, was approximately 11.5%. The equity component will not be remeasured as long as it continues to meet the conditions for equity classification.

As of September 30, 2018 and December 31, 2017, the outstanding principal on the Convertible Notes was $361.9 million, the unamortized debt discount was $34.3 million and $50.4 million, respectively, and the net carrying amount of the liability component was $327.7 million and $311.5 million, respectively.

We incurred approximately $10.4 million of issuance costs related to the issuance of the Convertible Notes of which $7.5 million and $2.9 million were recorded as deferred financing costs and additional paid-in capital, respectively, in proportion to the allocation of the proceeds of the Convertible Notes. The $7.5 million recorded as deferred financing costs on our consolidated balance sheet is being amortized over the term of the Convertible Notes using the effective interest method. Total amortization expense of the deferred financing costs was $0.4 million and $1.2 million, respectively, for the three and nine month periods ended September 30, 2018, and $0.4 million and $1.1 million, respectively, for the prior year periods. Amortization expense is included in interest expense in the unaudited condensed consolidated statements of operations. As of September 30, 2018 and December 31, 2017, the balance of unamortized deferred financing costs related to the Convertible Notes was $2.4 million and $3.6 million, respectively, and is included as a reduction to long-term debt in our unaudited condensed consolidated balance sheets. See Note 10, “Interest Costs” for additional information.

The Convertible Notes had an initial conversion rate of 41.9274 common shares per $1,000 principal amount of Convertible Notes, which is equivalent to an initial conversion price of approximately $23.85 per share of our common stock. Upon conversion, we currently expect to deliver cash up to the principal amount of the Convertible Notes then outstanding. With respect to any conversion value in excess of the principal amount, we currently expect to deliver shares of our common stock. We may elect to deliver cash in lieu of all or a portion of such shares. The shares of common stock subject to conversion are excluded from diluted earnings per share calculations under the if-converted method as their impact is anti-dilutive.

Holders may convert the Convertible Notes, at their option, in multiples of $1,000 principal amount at any time prior to December 1, 2019, but only in the following circumstances:

•

during any fiscal quarter beginning after the fiscal quarter ended June 30, 2015, if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during the last 30 consecutive trading days of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price of the Convertible Notes on each applicable trading day;

•

during the five business day period following any five consecutive trading day period in which the trading price for the Convertible Notes is less than 98% of the product of the last reported sale price of our common stock and the conversion rate for the Convertible Notes on each such trading day; or

•

upon the occurrence of specified corporate events.

None of the above events allowing for conversion prior to December 1, 2019 occurred during the three and nine month periods ended September 30, 2018 or the year ended December 31, 2017. Regardless of whether any of the foregoing circumstances occurs, a holder may convert its Convertible Notes, in multiples of $1,000 principal amount, at any time on or after December 1, 2019 until maturity.

In addition, if we undergo a fundamental change (as defined in the indenture governing the Convertible Notes), holders may, subject to certain conditions, require us to repurchase their Convertible Notes for cash at a price equal to 100% of the principal amount of the Convertible Notes to be purchased, plus any accrued and unpaid interest. In addition, if specific corporate events occur prior to the maturity date, we will increase the conversion rate for a holder who elects to convert its Convertible Notes in connection with such a corporate event in certain circumstances.

In connection with the issuance of the Convertible Notes, we paid approximately $140 million to enter into prepaid forward stock repurchase transactions (the “Forward Transactions”) with certain financial institutions (the “Forward Counterparties”), pursuant to which we purchased approximately 7.2 million shares of common stock for settlement on or around the March 1, 2020 maturity date for the Convertible Notes, subject to the ability of each Forward Counterparty to elect to settle all or a portion of its Forward Transactions early. As a result of the Forward Transactions, total shareholders’ equity within our unaudited condensed consolidated balance sheet was reduced by approximately $140 million. Approximately 7.2 million shares of common stock that will be effectively repurchased through the Forward Transactions are treated as retired shares for basic and diluted EPS purposes although they remain legally outstanding.

Restricted Cash - Our restricted cash balances were $6.9 million and $7.4 million, respectively, as of September 30, 2018 and December 31, 2017 and primarily consist of letters of credit. Certain of the letters of credit require us to maintain restricted cash accounts in a similar amount, and are issued for the benefit of the landlords at our current office locations in Chicago, IL, Bensenville, IL and Broomfield, CO.

Interest Costs

9 Months Ended

Sep. 30, 2018

Text Block [Abstract]

Interest Costs

10.

Interest Costs

We capitalize a portion of our interest on funds borrowed during the active construction period of major capital projects. Capitalized interest is added to the cost of the underlying assets and amortized over the useful lives of the assets.

The following is a summary of our interest costs for the three and nine month periods ended September 30, 2018 and 2017 (in thousands):


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2018			2017			2018			2017
Interest costs charged to expense	$	24,887		$	21,936		$	74,795		$	65,164
Amortization of deferred financing costs		1,060			919			3,143			2,718
Accretion of debt discount on Convertible Notes		5,517			4,945			16,109			14,438
Amortization of debt premium on Senior Secured Notes		(721	)		(215	)		(2,109	)		(566	)

Interest expense		30,743			27,585			91,938			81,754
Interest costs capitalized to property and equipment		7			9			22			15
Interest costs capitalized to software		101			193			208			804

Total interest costs	$	30,851		$	27,787		$	92,168		$	82,573

Leases

9 Months Ended

Sep. 30, 2018

Leases [Abstract]

Leases

11.

Leases

Arrangements with Commercial Airlines — Pursuant to contractual agreements with our airline partners, we place our equipment on commercial aircraft operated by the airlines for the purpose of delivering our service to passengers on the aircraft. There are currently two types of commercial airline arrangements: turnkey and airline-directed. See Note 3, “Revenue Recognition,” for additional information on airline-directed arrangements.

Under the turnkey model, we account for equipment transactions as operating leases of space for our equipment on the aircraft. We may be responsible for the costs of installing and/or deinstalling the equipment. Under the turnkey model, the equipment transactions involve the transfer of legal title but do not meet sales recognition for accounting purposes because the risks and rewards of ownership are not fully transferred due to our continuing involvement with the equipment, the length of the term of our agreements with the airlines, and restrictions in the agreements regarding the airlines’ use of the equipment. Under the turnkey model, we refer to the airline as a “partner.”

Under the turnkey model, the assets are recorded as airborne equipment on our unaudited condensed consolidated balance sheets, as noted in Note 6, “Composition of Certain Balance Sheet Accounts.” Any upfront equipment payments are accounted for as lease incentives and recorded as deferred airborne lease incentives on our unaudited condensed consolidated balance sheets and are recognized as a reduction of the cost of service revenue on a straight-line basis over the term of the agreement with the airline. We recognized $8.1 million and $23.2 million, respectively, for the three and nine month periods ended September 30, 2018 and $10.1 million and $28.1 million, respectively, for the prior year periods as a reduction to our cost of service revenue in our unaudited condensed consolidated statements of operations. As of September 30, 2018, deferred airborne lease incentives of $25.9 million and $129.9 million, respectively, are included in current and non-current liabilities in our unaudited condensed consolidated balance sheet. As of December 31, 2017, deferred airborne lease incentives of $42.1 million and $142.9 million, respectively, are included in current and non-current liabilities in our unaudited condensed consolidated balance sheet. The decrease in our deferred airborne lease incentives and the amortization of the deferred airborne lease incentives relate to the accounting impact of the transition of one of our airline agreements to the airline-directed model. See Note 1, “Basis of Presentation,” for additional information.

Under the turnkey model, the revenue share paid to our airline partners represents operating lease payments. They are deemed to be contingent rental payments, as the payments due to each airline are based on a percentage of our CA-NA and CA-ROW service revenue generated from that airline’s passengers, which is unknown until realized. Therefore, we cannot estimate the lease payments due to an airline at the commencement of our contract with such airline. This rental expense is included in cost of service revenue and is partially offset by the amortization of the deferred airborne lease incentives discussed above. Such rental expenses totaled a net charge of $5.5 million and $18.6 million, respectively, for the three and nine month periods ended September 30, 2018 and $7.7 million and $26.9 million, respectively, for the prior year periods. The decrease in rental expense was due to the transition of one of our airline agreements to the airline-directed model. See Note 1, “Basis of Presentation,” for additional information.

Leases and Cell Site Contracts — We have lease agreements relating to certain facilities and equipment, which are considered operating leases. Rent expense for such operating leases was $3.3 million and $9.4 million, respectively, for the three and nine month periods ended September 30, 2018 and $3.0 million and $9.0 million, respectively, for the prior year periods. Additionally, we have operating leases for tower space and base stations (“cell site leases”), some of which provide for minimum annual payments. Our cell site leases generally provide for an initial noncancelable term with various renewal options. Total cell site rental expense was $2.6 million and $7.9 million, respectively, during the three and nine month periods ended September 30, 2018 and $2.3 million and $7.0 million, respectively, for the prior year periods.

Annual future minimum obligations for operating leases for each of the next five years and thereafter, other than the arrangements we have with our commercial airline partners, as of September 30, 2018, are as follows (in thousands):


Years ending December 31,	Operating Leases
2018 (period from October 1 to December 31)	$	5,760
2019	$	21,641
2020	$	19,680
2021	$	19,567
2022	$	18,272
Thereafter	$	92,599

Equipment Leases – We lease certain computer and network equipment under capital leases, for which interest has been imputed with annual interest rates in an approximate range of 8% to 14%. As of September 30, 2018 and December 31, 2017 the computer equipment leases were classified as part of office equipment, furniture, and fixtures and other in our unaudited condensed consolidated balance sheet at a gross cost of $5.3 million and $5.0 million, respectively. As of September 30, 2018 and December 31, 2017, the network equipment leases were classified as part of network equipment in our unaudited condensed consolidated balance sheet at a gross cost of $7.5 million and $7.5 million, respectively.

Annual future minimum obligations under capital leases for each of the next five years and thereafter, as of September 30, 2018, are as follows (in thousands):


Years ending December 31,	Capital Leases
2018 (period from October 1 to December 31)	$	385
2019		1,053
2020		222
Thereafter		—

Total minimum lease payments		1,660
Less: Amount representing interest		(93	)

Present value of net minimum lease payments	$	1,567

The $1.6 million present value of net minimum lease payments as of September 30, 2018 has a current portion of $1.2 million included in the current portion of long-term debt and capital leases and a non-current portion of $0.4 million included in other non-current liabilities.

Commitments and Contingencies

9 Months Ended

Sep. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

12.

Commitments and Contingencies

Contractual Commitments - We have agreements with vendors to provide us with transponder and teleport satellite services. These agreements vary in length and amount and as of September 30, 2018 commit us to purchase transponder and teleport satellite services totaling approximately $21.5 million in 2018 (October 1 through December 31), $85.7 million in 2019, $82.7 million in 2020, $70.2 million in 2021, $62.8 million in 2022 and $216.5 million thereafter.

We have agreements with various vendors under which we have remaining commitments to purchase satellite-based systems, certifications and development services. Such commitments will become payable as we receive the equipment or certifications, or as development services are provided.

A contract with one of our airline customers required us to provide the airline customer with a cash rebate of $1.8 million in June 2018, which has not yet been paid.

Damages and Penalties—We have entered into a number of agreements with our airline partners that require us to provide a credit or pay penalties or liquidated damages to our airline partners if we are unable to install our equipment on aircraft by specified timelines or fail to comply with service level commitments. The maximum amount of future credits or payments we could be required to make under these agreements is uncertain because the amount of future credits or payments is based on certain variable inputs.

Indemnifications and Guarantees - In accordance with Delaware law, we indemnify our officers and directors for certain events or occurrences while the officer or director is, or was, serving at our request in such capacity. The maximum potential amount of future payments we could be required to make under this indemnification is uncertain and may be unlimited, depending upon circumstances. However, our Directors’ and Officers’ insurance does provide coverage for certain of these losses.

In the ordinary course of business we may occasionally enter into agreements pursuant to which we may be obligated to pay for the failure of performance of others, such as the use of corporate credit cards issued to employees. Based on historical experience, we believe that the risk of sustaining any material loss related to such guarantees is remote.

We have entered into a number of agreements, including our agreements with commercial airlines, pursuant to which we indemnify the other party for losses and expenses suffered or incurred in connection with any patent, copyright, or trademark infringement or misappropriation claim asserted by a third party with respect to our equipment or services. The maximum potential amount of future payments we could be required to make under these indemnification agreements is uncertain and is typically not limited by the terms of the agreements.

Linksmart Litigation—On April 20, 2018, Linksmart Wireless Technology, LLC filed suit against us and eight of our airline partners in the U.S. District Court for the Central District of California alleging that our redirection server and login portal infringe a patent owned by the plaintiff. We are required under our contracts with these airlines to indemnify them for defense costs and any liabilities resulting from the suit. Given the very early stage of this litigation, we are unable to assess the merits of the claim, and the outcome of this matter is inherently uncertain.

Securities Litigation—On June 27, 2018, a purported stockholder of the Company filed a putative class action lawsuit in the United States District Court for the Northern District of Illinois, Eastern Division styled Pierrelouis v. Gogo Inc., naming the Company, its former Chief Executive Officer and Chief Financial Officer and its current Chief Executive Officer, Chief Financial Officer, and President, Commercial Aviation as defendants purportedly on behalf of all purchasers of our securities from February 27, 2017 through May 7, 2018. The complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder, alleging misrepresentations or omissions by us purporting to relate to our 2Ku antenna’s reliability and installation and remediation costs. The plaintiffs seek to recover from us and the individual defendants an unspecified amount of damages. We believe that the claims are without merit and intend to defend them vigorously. In accordance with Delaware law, we will indemnify the individual named defendants for their defense costs and any damages they incur in connection with the suit. We have filed a claim with the issuer of our Directors’ and Officers’ insurance policy with respect to this suit. No amounts have been accrued for any potential losses under this matter, as we cannot reasonably predict the outcome of the litigation or any potential losses.

Derivative Litigation - On September 25, 2018 and September 26, 2018, two purported stockholders of the Company filed substantively identical derivative lawsuits in the United States District Court for the Northern District of Illinois, Eastern Division, styled Nanduri v. Gogo Inc. and Hutsenpiller v. Gogo Inc. Both lawsuits were purportedly brought derivatively on behalf of us and name us as a nominal defendant and name as Defendants each member of the Company’s Board of Directors, its former Chief Executive Officer and Chief Financial Officer and its current Chief Executive Officer, Chief Financial Officer, and President, Commercial Aviation. The complaints assert claims under Section 14(a) of the Securities Exchange Act of 1934, breach of fiduciary duty, unjust enrichment, and waste of corporate assets, and allege misrepresentations or omissions by us purporting to relate to our 2Ku antenna’s reliability and installation and remediation costs, as well as allegedly excessive bonuses, stock options, and other compensation paid to current Officers and Directors and excessive severance paid to former Officers. We believe that the claims are without merit and intend to defend them vigorously. The plaintiffs seek to recover, on our behalf, an unspecified amount of damages from the individual defendants. We have filed a claim with the issuer of our Directors’ and Officers’ insurance policy with respect to these suits. No amounts have been accrued for any potential costs under this matter, as we cannot reasonably predict the outcome of the litigation or any potential costs.

Fair Value of Financial Assets and Liabilities

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value of Financial Assets and Liabilities

13.

Fair Value of Financial Assets and Liabilities

A three-tier fair value hierarchy has been established which prioritizes the inputs used in measuring fair value. These tiers include:

•

Level 1 - defined as observable inputs such as quoted prices in active markets;

•

Level 2 - defined as observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

•

Level 3 - defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

Long-Term Debt:

Our financial assets and liabilities that are disclosed but not measured at fair value include the Senior Secured Notes and the Convertible Notes, which are reflected on the unaudited condensed consolidated balance sheet at cost. The fair value measurements are classified as Level 2 within the fair value hierarchy since they are based on quoted market prices of our instruments in markets that are not active. We estimated the fair value of the Senior Secured Notes and Convertible Notes by calculating the upfront cash payment a market participant would require to assume these obligations. The upfront cash payment used in the calculations of fair value on our September 30, 2018 unaudited condensed consolidated balance sheet, excluding any issuance costs, is the amount that a market participant would be willing to lend at September 30, 2018 to an entity with a credit rating similar to ours and achieve sufficient cash inflows to cover the scheduled cash outflows under the Senior Secured Notes and the Convertible Notes. The calculated fair value of our Convertible Notes is correlated to our stock price and as a result significant changes to our stock price could have a significant impact on the calculated fair value of our Convertible Notes.

The fair value and carrying value of long-term debt as of September 30, 2018 and December 31, 2017 were as follows (in thousands):


	September 30, 2018					December 31, 2017
	Fair Value ⁽¹⁾		Carrying Value			Fair Value ⁽¹⁾		Carrying Value
Senior Secured Notes	$	758,000	$	703,411	⁽²⁾	$	782,000	$	705,520	⁽²⁾
Convertible Notes		342,000		327,653	⁽³⁾		330,000		311,544	⁽³⁾

(1)	Fair value amounts are rounded to the nearest million.

(2)	Carrying value of the Senior Secured Notes includes unamortized debt premium and Consent Fees of $13.4 million and $15.5 million, respectively, as of September 30, 2018 and December 31, 2017. See Note 9, “Long-Term Debt and Other Liabilities,” for further information.

(3)	Carrying value of the Convertible Notes excludes unamortized debt discount of $34.3 million and $50.4 million, respectively, as of September 30, 2018 and December 31, 2017. See Note 9, “Long-Term Debt and Other Liabilities,” for further information.

We have held-to-maturity financial instruments where carrying value approximates fair value. There were no fair value adjustments to these financial instruments during the three and nine month periods ended September 30, 2018 and 2017.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Income Tax

9 Months Ended

Sep. 30, 2018

Income Tax Disclosure [Abstract]

Income Tax

14.

Income Tax

The effective income tax rates for the three and nine month periods ended September 30, 2018 were (0.5%) and 3.3%, respectively, as compared with (0.8%) and (0.7%), respectively, for the prior year periods. An income tax benefit was recorded for the nine month period ended September 30, 2018 resulting from a reduction in our valuation allowance of approximately $4.0 million due to the application of provisions of H.R. 1, commonly known as the Tax Cuts and Jobs Act, to our evaluation of our deferred tax assets. For the three and nine month periods ended September 30, 2017, our income tax expense was not significant primarily due to the recording of a valuation allowance against our net deferred tax assets.

We are subject to income taxation in the United States, various states within the United States, Canada, Switzerland, Japan, Mexico, Brazil, Singapore, the United Kingdom, Hong Kong, Australia, China, India, France, Germany and the Netherlands. With few exceptions, as of September 30, 2018, we are no longer subject to U.S. federal, state, local or foreign examinations by tax authorities for years before 2014.

We record penalties and interest relating to uncertain tax positions in the income tax provision line item in the unaudited condensed consolidated statement of operations. No penalties or interest related to uncertain tax positions were recorded for the three and nine month periods ended September 30, 2018 and 2017. As of September 30, 2018 and December 31, 2017, we did not have a liability recorded for interest or potential penalties.

We do not expect a change in the unrecognized tax benefits within the next 12 months.

Business Segments and Major Customers

9 Months Ended

Sep. 30, 2018

Segment Reporting [Abstract]

Business Segments and Major Customers

15.

Business Segments and Major Customers

We operate our business through three operating segments: Commercial Aviation North America, or “CA-NA,” Commercial Aviation Rest of World, or “CA-ROW,” and Business Aviation, or “BA.” See Note 1, “Basis of Presentation,” for further information regarding our segments.

The accounting policies of the operating segments are the same as those described in Note 2, “Summary of Significant Accounting Policies,” in our 2017 10-K. Intercompany transactions between segments are excluded as they are not included in management’s performance review of the segments. For the three and nine month periods ended September 30, 2018 and 2017, our foreign revenue accounted for less than 15% of our consolidated revenue. We do not segregate assets between segments for internal reporting. Therefore, asset-related information has not been presented. Additionally, assets outside of the United States totaled less than 15% and 10% of our unaudited condensed consolidated assets as of September 30, 2018 and December 31, 2017, respectively. For our airborne assets, we consider only those assets installed in aircraft associated with international commercial airline partners to be owned outside of the United States.

Management evaluates performance and allocates resources to each segment based on segment profit (loss), which is calculated internally as net income (loss) attributable to common stock before interest expense, interest income, income taxes, depreciation and amortization, certain non-cash items (including amortization of deferred airborne lease incentives, stock-based compensation expense, amortization of STC costs and the accounting impact of the transition to the airline-directed model) and other income (expense). Segment profit (loss) is a measure of performance reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and evaluating segment performance. In addition, segment profit (loss) is included herein in conformity with ASC 280-10, Segment Reporting. Management believes that segment profit (loss) provides useful information for analyzing and evaluating the underlying operating results of each segment. However, segment profit (loss) should not be considered in isolation or as a substitute for net income (loss) attributable to common stock or other measures of financial performance prepared in accordance with GAAP. Additionally, our computation of segment profit (loss) may not be comparable to other similarly titled measures computed by other companies.

Information regarding our reportable segments is as follows (in thousands):


	For the Three Months Ended September 30, 2018
	CA-NA		CA-ROW			BA		Total
Service revenue	$	93,443	$	17,646		$	49,287	$	160,376
Equipment revenue		15,027		17,551			24,303		56,881

Total revenue	$	108,470	$	35,197		$	73,590	$	217,257

Segment profit (loss)	$	8,699	$	(22,747	)	$	35,178	$	21,130


	For the Three Months Ended September 30, 2017
	CA-NA		CA-ROW			BA		Total
Service revenue	$	94,436	$	15,687		$	43,224	$	153,347
Equipment revenue		1,291		953			17,283		19,527

Total revenue	$	95,727	$	16,640		$	60,507	$	172,874

Segment profit (loss)	$	15,966	$	(24,110	)	$	21,329	$	13,185


	For the Nine Months Ended September 30, 2018
	CA-NA		CA-ROW			BA		Total
Service revenue	$	277,972	$	47,076		$	145,062	$	470,110
Equipment revenue (1)		93,969		40,935			71,526		206,430

Total revenue	$	371,941	$	88,011		$	216,588	$	676,540

Segment profit (loss)	$	17,396	$	(69,826	)	$	104,180	$	51,750


	For the Nine Months Ended September 30, 2017
	CA-NA		CA-ROW			BA		Total
Service revenue	$	290,260	$	38,243		$	125,415	$	453,918
Equipment revenue		5,234		2,756			49,172		57,162

Total revenue	$	295,494	$	40,999		$	174,587	$	511,080

Segment profit (loss)	$	43,316	$	(82,068	)	$	72,646	$	33,894

(1)

CA-NA equipment revenue for the nine month period ended September 30, 2018 includes the accounting impact of the transition of one of our airline partners to the airline-directed model. See Note 1, “Basis of Presentation” for additional information.

A reconciliation of segment profit (loss) to the relevant consolidated amounts is as follows (in thousands):


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2018			2017			2018			2017
CA-NA segment profit	$	8,699		$	15,966		$	17,396		$	43,316
CA-ROW segment loss		(22,747	)		(24,110	)		(69,826	)		(82,068	)
BA segment profit		35,178			21,329			104,180			72,646

Total segment profit		21,130			13,185			51,750			33,894
Interest income		903			683			3,307			1,999
Interest expense		(30,743	)		(27,585	)		(91,938	)		(81,754	)
Depreciation and amortization		(32,590	)		(35,824	)		(100,447	)		(96,821	)


Transition to airline-directed model		—			—			21,551			—
Amortization of deferred airborne lease incentives ⁽¹⁾		8,074			10,121			23,166			28,099
Amortization of STC costs		(292	)		—			(719	)		—
Stock-based compensation expense		(3,932	)		(5,283	)		(12,531	)		(15,007	)
Other income (expense)		(72	)		(228	)		59			(322	)

Loss before income taxes	$	(37,522	)	$	(44,931	)	$	(105,802	)	$	(129,912	)

(1) Amortization of deferred airborne lease incentive relates to our CA-NA and CA-ROW segments. See Note 11, “Leases,” for further information.

Major Customers and Airline Partnerships — Under the turnkey model, we refer to the airline as a “partner”, and under the airline-directed model, we refer to the airline as a “customer.”

During the three and nine month periods ended September 30, 2018, American Airlines accounted for approximately 18% and 25% of consolidated revenue, respectively, while no other customer accounted for more than 10% of consolidated revenue during the prior year periods. Revenue earned from American Airlines for the nine month period ended September 30, 2018 included $45.4 million of equipment revenue recognized due to the airline’s transition to the airline-directed model in January 2018. See Note 1, “Basis of Presentation,” for additional information. Revenue earned from passengers on aircraft operated by American Airlines, which was under the turnkey model during the three and nine month periods ended September 30, 2017, accounted for approximately 21% and 22% of consolidated revenue, respectively.

Revenue earned from passengers on aircraft operated by Delta Air Lines, which is under the turnkey model, accounted for approximately 25% and 23% of consolidated revenue, respectively, for the three and nine month periods ended September 30, 2018 and 26% during both prior year periods.

American Airlines and one other customer each accounted for more than 10% of consolidated accounts receivable as of September 30, 2018, and approximately 21% on a combined basis. One customer accounted for approximately 15% of consolidated accounts receivable as of December 31, 2017. Delta Air Lines, one of our airline partners, accounted for approximately 11% and 21%, respectively, of consolidated accounts receivable as of September 30, 2018 and December 31, 2017.

Employee Retirement and Postretirement Benefits

9 Months Ended

Sep. 30, 2018

Text Block [Abstract]

Employee Retirement and Postretirement Benefits

16.

Employee Retirement and Postretirement Benefits

Stock-Based Compensation — As of September 30, 2018, we had three stock-based employee compensation plans (“Stock Plans”). See Note 11, “Stock-Based Compensation,” in our 2017 10-K for further information regarding these plans. Most of our equity grants are awarded on an annual basis.

For the nine month period ended September 30, 2018, options to purchase 2,450,330 shares of common stock (of which 660,242 are options that contain a market condition, in addition to the time-based vesting requirements) were granted, options to purchase 2,500 shares of common stock were exercised, options to purchase 776,246 (of which 333,451 options contain a market condition) shares of common stock were forfeited, and options to purchase 1,078,948 shares of common stock expired.

For the nine month period ended September 30, 2018, 2,530,236 Restricted Stock Units (“RSUs”) (of which 216,183 are RSUs that contain a market condition, in addition to the time-based vesting requirements) were granted, 463,803 RSUs vested and 450,053 RSUs (of which 108,701 contained a market condition) were forfeited.

For the nine month period ended September 30, 2018, 93,266 restricted shares vested. These shares are deemed issued as of the date of grant, but not outstanding until they vest.

For the nine month period ended September 30, 2018, 104,511 Deferred Stock Units were granted and vested.

For the nine month period ended September 30, 2018, 231,761 shares of common stock were issued under the employee stock purchase plan.

The following is a summary of our stock-based compensation expense by operating expense line in the unaudited condensed consolidated statements of operations (in thousands):


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2018		2017		2018		2017
Cost of service revenue	$	303	$	542	$	1,184	$	1,332
Cost of equipment revenue		33		49		146		136
Engineering, design and development		812		897		2,505		2,801
Sales and marketing		901		1,305		3,209		3,473
General and administrative		1,883		2,490		5,487		7,265

Total stock-based compensation expense	$	3,932	$	5,283	$	12,531	$	15,007

401(k) Plan — Under our 401(k) plan, all employees who are eligible to participate are entitled to make tax-deferred contributions, subject to Internal Revenue Service limitations. We match 100% of the employee’s first 4% of contributions made, subject to annual limitations. Our matching contributions were $1.2 million and $3.8 million, respectively, during the three and nine month periods ended September 30, 2018, and $1.2 million and $4.0 million, respectively, for the prior year periods.

Research and Development Costs

9 Months Ended

Sep. 30, 2018

Research and Development [Abstract]

Research and Development Costs

17.

Research and Development Costs

Expenditures for research and development are charged to expense as incurred and totaled $19.2 million and $56.3 million, respectively, during the three and nine month periods ended September 30, 2018, and $18.6 million and $57.9 million, respectively, for the prior year periods. Research and development costs are reported as a component of engineering, design and development expenses in our unaudited condensed consolidated statements of operations.

Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Basis of Presentation

We have one class of common stock outstanding as of September 30, 2018 and December 31, 2017.

Reclassifications

Transition to airline-directed model


	Increase (decrease)
Unaudited condensed consolidated balance sheet
Prepaid expense and other current assets	$	6,603
Property and equipment, net		(32,716	)
Other non-current assets		18,783
Accrued liabilities		2,000
Current deferred airborne lease incentive		(13,592	)
Non-current deferred airborne lease incentive		(17,289	)
Unaudited condensed consolidated statement of operations
Equipment revenue		45,396
Cost of equipment revenue		23,845

Use of Estimates

Basis of Presentation (Tables)

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Summary of Financial Effects Due to Transition of Agreements

the total financial statement effect on our unaudited condensed consolidated balance sheet and unaudited condensed consolidated statement of operations was as follows (in thousands):


	Increase (decrease)
Unaudited condensed consolidated balance sheet
Prepaid expense and other current assets	$	6,603
Property and equipment, net		(32,716	)
Other non-current assets		18,783
Accrued liabilities		2,000
Current deferred airborne lease incentive		(13,592	)
Non-current deferred airborne lease incentive		(17,289	)
Unaudited condensed consolidated statement of operations
Equipment revenue		45,396
Cost of equipment revenue		23,845

Recent Accounting Pronouncements (Tables)

9 Months Ended

Sep. 30, 2018

Accounting Changes and Error Corrections [Abstract]

Summary of Cumulative Effect of Adoption on Consolidated Balance Sheets

The cumulative effect of the adoption of ASC 606 and ASC 340-40 to our unaudited condensed consolidated balance sheet as of January 1, 2018 was as follows (in thousands):


	Balance at December 31, 2017			Impact of ASC 606			Balances with Adoption of ASC 606
Assets
Inventories	$	45,543		$	974		$	46,517
Prepaid expenses and other current assets		20,310			603			20,913
Property and equipment, net		656,038			(5,282	)		650,756
Other non-current assets		67,107			(30,006	)		37,101
Liabilities
Current deferred revenue		43,448			(7,182	)		36,266
Other non-current liabilities		134,655			(48,378	)		86,277
Equity
Accumulated deficit		(1,089,369	)		21,849			(1,067,520	)

Revenue Recognition (Tables)

9 Months Ended

Sep. 30, 2018

Summary of Revenue Disaggregated by Category

The following table presents our revenue disaggregated by category (in thousands):


	For the Three Months Ended September 30, 2018
	CA-NA		CA-ROW		BA		Total
Service revenue
Connectivity	$	85,930	$	17,168	$	48,926	$	152,024
Entertainment, CAS and other		7,513		478		361		8,352

Total service revenue	$	93,443	$	17,646	$	49,287	$	160,376

Equipment revenue
ATG	$	2,518	$	—	$	20,158	$	22,676
Satellite		12,509		17,551		4,022		34,082
Other		—		—		123		123

Total equipment revenue	$	15,027	$	17,551	$	24,303	$	56,881

Customer type
Airline passenger and aircraft owner/operator	$	53,873	$	6,086	$	49,287	$	109,246
Airline, OEM and aftermarket dealer		39,336		27,146		24,303		90,785
Third party		15,261		1,965		—		17,226

Total revenue	$	108,470	$	35,197	$	73,590	$	217,257


	For the Nine Months Ended September 30, 2018
	CA-NA		CA-ROW		BA		Total
Service revenue
Connectivity	$	256,803	$	45,365	$	144,149	$	446,317
Entertainment, CAS and other		21,169		1,711		913		23,793

Total service revenue	$	277,972	$	47,076	$	145,062	$	470,110

Equipment revenue
ATG (1)	$	49,534	$	—	$	56,076	$	105,610
Satellite (1)		44,435		40,935		12,741		98,111
Other		—		—		2,709		2,709

Total equipment revenue	$	93,969	$	40,935	$	71,526	$	206,430

Customer type
Airline passenger and aircraft owner/operator	$	161,515	$	15,912	$	145,062	$	322,489
Airline, OEM and aftermarket dealer (2)		165,903		66,151		71,526		303,580
Third party		44,523		5,948		—		50,471

Total revenue	$	371,941	$	88,011	$	216,588	$	676,540

2)	Airline, OEM and aftermarket dealer revenue includes all equipment revenue for our three segments, including the $45.4 million accounting impact of the transition of one of our airline partners to the airline-directed model.

Accounting Standards Update 2014-09 [Member]

Summary of Post Adoption Impact of ASC 606 on Unaudited Condensed Consolidated Balance Sheet and Statement of Operations

The following table presents the post adoption impact of ASC 606 on our unaudited condensed consolidated balance sheet and the statement of operations (in thousands):


	As of September 30, 2018
	As Reported			Impact of ASC 606			Balances Without Adoption of ASC 606
Assets
Prepaid expenses and other current assets	$	32,490		$	(11,835	)	$	20,655
Other non-current assets		77,994			66,218			144,212
Liabilities
Current deferred revenue		34,815			27,899			62,714
Other non-current liabilities		83,119			64,803			147,922
Equity
Accumulated deficit		(1,169,863	)		(24,165	)		(1,194,028	)

	For the Three Months Ended September 30, 2018
	As Reported			Impact of ASC 606			Balances Without Adoption of ASC 606
Revenue:
Service revenue	$	160,376		$	3,071		$	163,447
Equipment revenue		56,881			(18,545	)		38,336
Operating expenses:
Cost of equipment revenue		53,960			(12,478	)		41,482
Engineering, design and development		30,018			394			30,412
Net loss		(37,717	)		(3,390	)		(41,107	)

	For the Nine Months Ended September 30, 2018
	As Reported			Impact of ASC 606			Balances Without Adoption of ASC 606
Revenue:
Service revenue	$	470,110		$	11,574		$	481,684
Equipment revenue		206,430			(100,564	)		105,866
Operating expenses:
Cost of equipment revenue		170,603			(76,772	)		93,831
Engineering, design and development		88,204			1,936			90,140
Net loss		(102,343	)		(14,154	)		(116,497	)

Net Loss Per Share (Tables)

9 Months Ended

Sep. 30, 2018

Earnings Per Share [Abstract]

Computation of Basic and Diluted Earnings Per Share


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2018			2017			2018			2017
Net loss	$	(37,717	)	$	(45,281	)	$	(102,343	)	$	(130,857	)
Less: Participation rights of the Forward Transactions		—			—			—			—

Undistributed losses	$	(37,717	)	$	(45,281	)	$	(102,343	)	$	(130,857	)

Weighted-average common shares outstanding-basic and diluted		80,196			79,543			79,948			79,340

Net loss attributable to common stock per share-basic and diluted	$	(0.47	)	$	(0.57	)	$	(1.28	)	$	(1.65	)

Inventories (Tables)

9 Months Ended

Sep. 30, 2018

Inventory Disclosure [Abstract]

Components of Inventories

Inventories as of September 30, 2018 and December 31, 2017 were as follows (in thousands):


	September 30, 2018		December 31, 2017
Work-in-process component parts	$	30,080	$	35,009
Finished goods (1)		179,654		10,534

Total inventory	$	209,734	$	45,543

(1)

Composition of Certain Balance Sheet Accounts (Tables)

9 Months Ended

Sep. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets as of September 30, 2018 and December 31, 2017 were as follows (in thousands):


	September 30, 2018		December 31, 2017
Contract assets (1)	$	9,919	$	—
Prepaid satellite services		6,241		3,360
Restricted cash		1,773		500
Other		14,557		16,450

Total prepaid expenses and other current assets	$	32,490	$	20,310

(1)

Property and Equipment

Property and equipment as of September 30, 2018 and December 31, 2017 were as follows (in thousands):


	September 30, 2018			December 31, 2017
Office equipment, furniture, fixtures and other	$	50,903		$	46,445
Leasehold improvements		44,593			42,522
Airborne equipment (1) (2)		617,795			765,652
Network equipment		201,957			199,304

	915,248			1,053,923
Accumulated depreciation (1)		(408,545	)		(397,885	)

Property and equipment, net	$	506,703		$	656,038

(1)

(2)

Changes between September 30, 2018 and December 31, 2017 also relate to the allocation of uninstalled airborne equipment to inventory (see Note 5, “Inventories,” for additional information).

Other Non-Current Liabilities

Other non-current assets as of September 30, 2018 and December 31, 2017 were as follows (in thousands):


	September 30, 2018		December 31, 2017
Contract assets (1)	$	41,901	$	—
Deferred STC costs (1)		16,723		—
Deferred cost of equipment revenue (1)		—		40,986
Restricted cash		5,126		6,873
Other		14,244		19,248

Total other non-current assets	$	77,994	$	67,107

(1)

Accrued Liabilities

Accrued liabilities as of September 30, 2018 and December 31, 2017 were as follows (in thousands):


	September 30, 2018		December 31, 2017
Employee compensation and benefits	$	18,295	$	25,621
Airborne equipment and installation costs		22,002		44,059
Airline related accrued liabilities		30,568		13,566
Accrued interest		22,694		47,649
Accrued revenue share		14,354		17,339
Accrued satellite network costs		17,061		12,667
Warranty reserve		10,302		2,424
Other		49,636		38,490

Total accrued liabilities	$	184,912	$	201,815

Schedule of Other Non-Current Assets

Other non-current liabilities as of September 30, 2018 and December 31, 2017 were as follows (in thousands):


	September 30, 2018		December 31, 2017
Deferred revenue (1)	$	24,047	$	73,192
Deferred rent		36,562		37,354
Asset retirement obligations		9,505		9,668
Deferred tax liabilities		2,117		5,983
Other		10,888		8,458

Total other non-current liabilities	$	83,119	$	134,655

(1)

Changes between September 30, 2018 and December 31, 2017 are primarily due to the adoption of ASC 606. See Note 2, “Recent Accounting Pronouncements,” for additional information.

Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets, Other than Goodwill

Our intangible assets, other than goodwill, as of September 30, 2018 and December 31, 2017 were as follows (in thousands, except for weighted average remaining useful life):


	Weighted Average		As of September 30, 2018							As of December 31, 2017
	Remaining Useful Life (in years)		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Amortized intangible assets:
Software		2.2	$	159,512	$	(111,430	)	$	48,082	$	145,063	$	(93,523	)	$	51,540
Service customer relationship		1.6		8,081		(6,550	)		1,531		8,081		(5,788	)		2,293
Other intangible assets		5.1		3,000		(1,386	)		1,614		1,500		(1,103	)		397
OEM and dealer relationships				6,724		(6,724	)		—		6,724		(6,724	)		—

Total amortized intangible assets				177,317		(126,090	)		51,227		161,368		(107,138	)		54,230
Unamortized intangible assets:
FCC Licenses				32,283		—			32,283		32,283		—			32,283

Total intangible assets			$	209,600	$	(126,090	)	$	83,510	$	193,651	$	(107,138	)	$	86,513

Summary of Amortization Expenses

Amortization expense for each of the next five years and thereafter is estimated to be as follows (in thousands):


Years ending December 31,	Amortization Expense
2018 (period from October 1 to December 31)	$	6,524
2019	$	20,550
2020	$	12,829
2021	$	7,130
2022	$	2,441
Thereafter	$	1,753

Long-Term Debt and Other Liabilities (Tables)

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Schedule of Long-Term Debt

Long-term debt as of September 30, 2018 and December 31, 2017 was as follows (in thousands):


	September 30, 2018			December 31, 2017
Senior Secured Notes	$	703,411		$	705,520
Convertible Notes		327,653			311,544

Total debt		1,031,064			1,017,064
Less deferred financing costs		(13,053	)		(16,196	)

Total long-term debt	$	1,018,011		$	1,000,868

Summary of Redemption Prices Plus Accrued and Unpaid Interest

The Senior Secured Notes will be redeemable at the following redemption prices (expressed in percentages of principal amount), plus accrued and unpaid interest, if any, to (but not including) the redemption date (subject to the right of holders of record on the relevant regular record date on or prior to the redemption date to receive interest due on an interest payment date), if redeemed during the twelve-month period commencing on July 1 of the following years:


	Redemption
Year	Price
2019		106.250	%
2020		103.125	%
2021 and thereafter		100.000	%

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.22)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=114775744&loc=d3e28541-108399

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21506-112644

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(e),(f))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=114775744&loc=d3e28551-108399

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21521-112644

Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21538-112644

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 470
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=75038535&loc=d3e64711-112823

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 55
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=114775985&loc=d3e28878-108400

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21475-112644

+ Details

Interest Costs (Tables)

9 Months Ended

Sep. 30, 2018

Text Block [Abstract]

Summary of Interest Costs

The following is a summary of our interest costs for the three and nine month periods ended September 30, 2018 and 2017 (in thousands):


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2018			2017			2018			2017
Interest costs charged to expense	$	24,887		$	21,936		$	74,795		$	65,164
Amortization of deferred financing costs		1,060			919			3,143			2,718
Accretion of debt discount on Convertible Notes		5,517			4,945			16,109			14,438
Amortization of debt premium on Senior Secured Notes		(721	)		(215	)		(2,109	)		(566	)

Interest expense		30,743			27,585			91,938			81,754
Interest costs capitalized to property and equipment		7			9			22			15
Interest costs capitalized to software		101			193			208			804

Total interest costs	$	30,851		$	27,787		$	92,168		$	82,573

Leases (Tables)

9 Months Ended

Sep. 30, 2018

Leases [Abstract]

Annual Future Minimum Obligations for Operating Leases Other than Arrangements with Commercial Airline Partners


Years ending December 31,	Operating Leases
2018 (period from October 1 to December 31)	$	5,760
2019	$	21,641
2020	$	19,680
2021	$	19,567
2022	$	18,272
Thereafter	$	92,599

Annual Future Minimum Obligations under Capital Leases

Annual future minimum obligations under capital leases for each of the next five years and thereafter, as of September 30, 2018, are as follows (in thousands):


Years ending December 31,	Capital Leases
2018 (period from October 1 to December 31)	$	385
2019		1,053
2020		222
Thereafter		—

Total minimum lease payments		1,660
Less: Amount representing interest		(93	)

Present value of net minimum lease payments	$	1,567

Fair Value of Financial Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

Summary of Fair Value and Carrying Value of Long-Term Debt

The fair value and carrying value of long-term debt as of September 30, 2018 and December 31, 2017 were as follows (in thousands):


	September 30, 2018					December 31, 2017
	Fair Value ⁽¹⁾		Carrying Value			Fair Value ⁽¹⁾		Carrying Value
Senior Secured Notes	$	758,000	$	703,411	⁽²⁾	$	782,000	$	705,520	⁽²⁾
Convertible Notes		342,000		327,653	⁽³⁾		330,000		311,544	⁽³⁾

(1)	Fair value amounts are rounded to the nearest million.

(2)	Carrying value of the Senior Secured Notes includes unamortized debt premium and Consent Fees of $13.4 million and $15.5 million, respectively, as of September 30, 2018 and December 31, 2017. See Note 9, “Long-Term Debt and Other Liabilities,” for further information.

(3)	Carrying value of the Convertible Notes excludes unamortized debt discount of $34.3 million and $50.4 million, respectively, as of September 30, 2018 and December 31, 2017. See Note 9, “Long-Term Debt and Other Liabilities,” for further information.

Business Segments and Major Customers (Tables)

9 Months Ended

Sep. 30, 2018

Segment Reporting [Abstract]

Summary of Reportable Segments

Information regarding our reportable segments is as follows (in thousands):


	For the Three Months Ended September 30, 2018
	CA-NA		CA-ROW			BA		Total
Service revenue	$	93,443	$	17,646		$	49,287	$	160,376
Equipment revenue		15,027		17,551			24,303		56,881

Total revenue	$	108,470	$	35,197		$	73,590	$	217,257

Segment profit (loss)	$	8,699	$	(22,747	)	$	35,178	$	21,130


	For the Three Months Ended September 30, 2017
	CA-NA		CA-ROW			BA		Total
Service revenue	$	94,436	$	15,687		$	43,224	$	153,347
Equipment revenue		1,291		953			17,283		19,527

Total revenue	$	95,727	$	16,640		$	60,507	$	172,874

Segment profit (loss)	$	15,966	$	(24,110	)	$	21,329	$	13,185


	For the Nine Months Ended September 30, 2018
	CA-NA		CA-ROW			BA		Total
Service revenue	$	277,972	$	47,076		$	145,062	$	470,110
Equipment revenue (1)		93,969		40,935			71,526		206,430

Total revenue	$	371,941	$	88,011		$	216,588	$	676,540

Segment profit (loss)	$	17,396	$	(69,826	)	$	104,180	$	51,750


	For the Nine Months Ended September 30, 2017
	CA-NA		CA-ROW			BA		Total
Service revenue	$	290,260	$	38,243		$	125,415	$	453,918
Equipment revenue		5,234		2,756			49,172		57,162

Total revenue	$	295,494	$	40,999		$	174,587	$	511,080

Segment profit (loss)	$	43,316	$	(82,068	)	$	72,646	$	33,894

(1)

Reconciliation of Segment Profit (loss)

A reconciliation of segment profit (loss) to the relevant consolidated amounts is as follows (in thousands):


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2018			2017			2018			2017
CA-NA segment profit	$	8,699		$	15,966		$	17,396		$	43,316
CA-ROW segment loss		(22,747	)		(24,110	)		(69,826	)		(82,068	)
BA segment profit		35,178			21,329			104,180			72,646

Total segment profit		21,130			13,185			51,750			33,894
Interest income		903			683			3,307			1,999
Interest expense		(30,743	)		(27,585	)		(91,938	)		(81,754	)
Depreciation and amortization		(32,590	)		(35,824	)		(100,447	)		(96,821	)


Transition to airline-directed model		—			—			21,551			—
Amortization of deferred airborne lease incentives ⁽¹⁾		8,074			10,121			23,166			28,099
Amortization of STC costs		(292	)		—			(719	)		—
Stock-based compensation expense		(3,932	)		(5,283	)		(12,531	)		(15,007	)
Other income (expense)		(72	)		(228	)		59			(322	)

Loss before income taxes	$	(37,522	)	$	(44,931	)	$	(105,802	)	$	(129,912	)

(1) Amortization of deferred airborne lease incentive relates to our CA-NA and CA-ROW segments. See Note 11, “Leases,” for further information.

Employee Retirement and Postretirement Benefits (Tables)

9 Months Ended

Sep. 30, 2018

Text Block [Abstract]

Summary of Stock-Based Compensation Expense by Operating Expense

The following is a summary of our stock-based compensation expense by operating expense line in the unaudited condensed consolidated statements of operations (in thousands):


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2018		2017		2018		2017
Cost of service revenue	$	303	$	542	$	1,184	$	1,332
Cost of equipment revenue		33		49		146		136
Engineering, design and development		812		897		2,505		2,801
Sales and marketing		901		1,305		3,209		3,473
General and administrative		1,883		2,490		5,487		7,265

Total stock-based compensation expense	$	3,932	$	5,283	$	12,531	$	15,007

Basis of Presentation - Additional Information (Detail) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2018 USD ($) Segment ClassOfCommonStock	Dec. 31, 2017 USD ($) ClassOfCommonStock	Sep. 30, 2017 USD ($)
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Number of operating segments \| Segment	3
Number of class of common stock outstanding \| ClassOfCommonStock	1	1
Non-current deferred rent combined with other non-current assets and liabilities	$ 36,562	$ 37,354
Reclassifications [Member]
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Accrued airline revenue share combined with accrued liabilities			$ 1,169
Current deferred rent combined with accrued liabilities			207
Non-current deferred rent combined with other non-current assets and liabilities			$ 543

Basis of Presentation - Summary of Financial Effects Due to Transition of Agreements (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Prepaid expense and other current assets	$ 32,490		$ 32,490		$ 20,310
Property and equipment, net	(506,703)		(506,703)		(656,038)
Other non-currentassets	77,994		77,994		67,107
Accrued liabilities	184,912		184,912		201,815
Current deferred airborne lease incentive	25,877		25,877		42,096
Non-current deferred airborne lease incentive	129,865		129,865		$ 142,938
Equipment revenue	217,257	$ 172,874	676,540	$ 511,080
Cost of equipment revenue	53,960	15,326	170,603	41,623
Product [Member]
Equipment revenue	56,881	$ 19,527	206,430	$ 57,162
Transition Agreements To Airline-directed Model [Member]
Prepaid expense and other current assets	6,603		6,603
Property and equipment, net	(32,716)		(32,716)
Other non-currentassets	18,783		18,783
Accrued liabilities	2,000		2,000
Current deferred airborne lease incentive	(13,592)		(13,592)
Non-current deferred airborne lease incentive	$ (17,289)		(17,289)
Transition Agreements To Airline-directed Model [Member] \| Product [Member]
Equipment revenue			45,396
Cost of equipment revenue			$ 23,845

Recent Accounting Pronouncements - Summary of Cumulative Effect of Adoption on Consolidated Balance Sheets (Detail) - USD ($) $ in Thousands	Sep. 30, 2018	Jan. 01, 2018	Dec. 31, 2017
Assets
Inventories	$ 209,734		$ 45,543
Prepaid expenses and other current assets	32,490		20,310
Property and equipment, net	506,703		656,038
Other non-currentassets	77,994		67,107
Liabilities
Current deferred revenue	34,815		43,448
Other non-currentliabilities	83,119		134,655
Equity
Accumulated deficit	(1,169,863)		$ (1,089,369)
Accounting Standards Update 2014-09 And 340-40 [Member]
Assets
Inventories		$ 46,517
Prepaid expenses and other current assets		20,913
Property and equipment, net		650,756
Other non-currentassets		37,101
Liabilities
Current deferred revenue		36,266
Other non-currentliabilities		86,277
Equity
Accumulated deficit		$ (1,067,520)
Accounting Standards Update 2014-09 And 340-40 [Member] \| Difference between Guidance in Effect Before and after Topic 606 and ASC 34040 [Member]
Assets
Inventories	974
Prepaid expenses and other current assets	603
Property and equipment, net	(5,282)
Other non-currentassets	(30,006)
Liabilities
Current deferred revenue	(7,182)
Other non-currentliabilities	(48,378)
Equity
Accumulated deficit	$ 21,849

Revenue Recognition - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2018	Jan. 01, 2018
Revenue from Contracts with Customers [Line Items]
Transaction price allocated to remaining performance obligations	$ 1,096.0	$ 1,096.0
Service revenue occurring period		1 year
Future equipment revenue recognition period		Next one to three years
Future Equipment Revenue [Member]
Revenue from Contracts with Customers [Line Items]
Equipment revenue		$ 218.0
Connectivity and Entertainment Service Revenues [Member]
Revenue from Contracts with Customers [Line Items]
Transaction price allocated to remaining performance obligations	878.0	878.0
Airline [Member]
Revenue from Contracts with Customers [Line Items]
Contract assets, current and non-current	51.8	51.8	$ 5.1
Accounting Standards Update 2014-09 [Member]
Revenue from Contracts with Customers [Line Items]
Deferred revenue, current and non-current	58.9	58.9	61.1
Deferred STC costs	16.7	16.7	$ 7.6
Accounting Standards Update 2014-09 [Member] \| Engineering, Design and Development [Member]
Revenue from Contracts with Customers [Line Items]
Deferred STC costs recognized	$ 0.3	$ 0.7

Revenue Recognition - Summary of Revenue Disaggregated by Category (Parenthetical) (Detail) $ in Millions	9 Months Ended
	Sep. 30, 2018 USD ($) Segment
Disaggregation of Revenue [Line Items]
Number of operating segments \| Segment	3
ATG [Member] \| CA-NA [Member]
Disaggregation of Revenue [Line Items]
Equipment revenue	$ 43.4
Satellite [Member] \| CA-NA [Member]
Disaggregation of Revenue [Line Items]
Equipment revenue	2.0
Airline, OEM and Aftermarket Dealer [Member] \| Product [Member] \| Transition Agreements To Airline-directed Model [Member] \| CA-NA [Member]
Disaggregation of Revenue [Line Items]
Equipment revenue	45.4
Airline Partners [Member] \| Product [Member] \| Transition Agreements To Airline-directed Model [Member] \| CA-NA [Member]
Disaggregation of Revenue [Line Items]
Equipment revenue	$ 45.4

Revenue Recognition - Summary of the Post Adoption Impact of ASC 606 - Balance Sheet (Detail) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Assets
Prepaid expenses and other current assets	$ 32,490	$ 20,310
Other non-currentassets	77,994	67,107
Liabilities
Current deferred revenue	34,815	43,448
Other non-currentliabilities	83,119	134,655
Equity
Accumulated deficit	(1,169,863)	$ (1,089,369)
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] \| Accounting Standards Update 2014-09 [Member]
Assets
Prepaid expenses and other current assets	(11,835)
Other non-currentassets	66,218
Liabilities
Current deferred revenue	27,899
Other non-currentliabilities	64,803
Equity
Accumulated deficit	(24,165)
Calculated under Revenue Guidance in Effect before Topic 606 [Member] \| Accounting Standards Update 2014-09 [Member] \| As Reported [Member]
Assets
Prepaid expenses and other current assets	20,655
Other non-currentassets	144,212
Liabilities
Current deferred revenue	62,714
Other non-currentliabilities	147,922
Equity
Accumulated deficit	$ (1,194,028)

Revenue Recognition - Summary of the Post Adoption Impact of ASC 606 - Statement of Operations (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenue:
Total revenue	$ 217,257	$ 172,874	$ 676,540	$ 511,080
Operating expenses:
Cost of equipment revenue	53,960	15,326	170,603	41,623
Engineering, design and development	30,018	31,313	88,204	103,262
Net loss	(37,717)	(45,281)	(102,343)	(130,857)
Revenue	217,257	172,874	676,540	511,080
Cost of equipment revenue	53,960	15,326	170,603	41,623
Engineering, design and development	30,018	31,313	88,204	103,262
Net loss	(37,717)	(45,281)	(102,343)	(130,857)
Service [Member]
Revenue:
Total revenue	160,376	153,347	470,110	453,918
Operating expenses:
Revenue	160,376	153,347	470,110	453,918
Product [Member]
Revenue:
Total revenue	56,881	19,527	206,430	57,162
Operating expenses:
Revenue	56,881	$ 19,527	206,430	$ 57,162
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] \| Accounting Standards Update 2014-09 [Member]
Operating expenses:
Cost of equipment revenue	(12,478)		(76,772)
Engineering, design and development	394		1,936
Net loss	(3,390)		(14,154)
Cost of equipment revenue	(12,478)		(76,772)
Engineering, design and development	394		1,936
Net loss	(3,390)		(14,154)
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] \| Accounting Standards Update 2014-09 [Member] \| Service [Member]
Revenue:
Total revenue	3,071		11,574
Operating expenses:
Revenue	3,071		11,574
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] \| Accounting Standards Update 2014-09 [Member] \| Product [Member]
Revenue:
Total revenue	(18,545)		(100,564)
Operating expenses:
Revenue	(18,545)		(100,564)
Calculated under Revenue Guidance in Effect before Topic 606 [Member] \| Accounting Standards Update 2014-09 [Member]
Operating expenses:
Cost of equipment revenue	41,482		93,831
Engineering, design and development	30,412		90,140
Net loss	(41,107)		(116,497)
Cost of equipment revenue	41,482		93,831
Engineering, design and development	30,412		90,140
Net loss	(41,107)		(116,497)
Calculated under Revenue Guidance in Effect before Topic 606 [Member] \| Accounting Standards Update 2014-09 [Member] \| Service [Member]
Revenue:
Total revenue	163,447		481,684
Operating expenses:
Revenue	163,447		481,684
Calculated under Revenue Guidance in Effect before Topic 606 [Member] \| Accounting Standards Update 2014-09 [Member] \| Product [Member]
Revenue:
Total revenue	38,336		105,866
Operating expenses:
Revenue	$ 38,336		$ 105,866

Net Loss Per Share - Computation of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Earnings Per Share [Abstract]
Net loss	$ (37,717)	$ (45,281)	$ (102,343)	$ (130,857)
Less: Participation rights of the Forward Transactions	0	0	0	0
Undistributed losses	$ (37,717)	$ (45,281)	$ (102,343)	$ (130,857)
Weighted-average common shares outstanding-basic and diluted	80,196	79,543	79,948	79,340
Net loss attributable to common stock per share-basic and diluted	$ (0.47)	$ (0.57)	$ (1.28)	$ (1.65)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Inventories - Components of Inventories (Detail) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Inventory Disclosure [Abstract]
Work-in-process component parts	$ 30,080	$ 35,009
Finished goods	179,654	10,534
Total inventory	$ 209,734	$ 45,543

Composition of Certain Balance Sheet Accounts - Schedule of Prepaid Expenses and Other Current Assets (Detail) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Prepaid Expense and Other Assets [Abstract]
Contract assets (1)	$ 9,919
Prepaid satellite services	6,241	$ 3,360
Restricted cash	1,773	500
Other	14,557	16,450
Total prepaid expenses and other current assets	$ 32,490	$ 20,310

Composition of Certain Balance Sheet Accounts - Property and Equipment (Detail) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 915,248	$ 1,053,923
Accumulated depreciation	(408,545)	(397,885)
Property and equipment, net	506,703	656,038
Office Equipment, Furniture, Fixtures and Other [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	50,903	46,445
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	44,593	42,522
Airborne Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	617,795	765,652
Network Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 201,957	$ 199,304

Composition of Certain Balance Sheet Accounts - Schedule of Other Non-Current Assets (Detail) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Other Assets, Noncurrent [Abstract]
Contract assets	$ 41,901
Deferred STC costs	16,723
Deferred cost of equipment revenue		$ 40,986
Restricted cash	5,126	6,873
Other	14,244	19,248
Total other non-currentassets	$ 77,994	$ 67,107

Composition of Certain Balance Sheet Accounts - Accrued Liabilities (Detail) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Accrued Liabilities, Current [Abstract]
Employee compensation and benefits	$ 18,295	$ 25,621
Airborne equipment and installation costs	22,002	44,059
Airline related accrued liabilities	30,568	13,566
Accrued interest	22,694	47,649
Accrued revenue share	14,354	17,339
Accrued satellite network costs	17,061	12,667
Warranty reserve	10,302	2,424
Other	49,636	38,490
Total accrued liabilities	$ 184,912	$ 201,815

Composition of Certain Balance Sheet Accounts - Other Non-Current Liabilities (Detail) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Other Liabilities, Noncurrent [Abstract]
Deferred revenue	$ 24,047	$ 73,192
Deferred rent	36,562	37,354
Asset retirement obligations	9,505	9,668
Deferred tax liabilities	2,117	5,983
Other	10,888	8,458
Total other non-current liabilities	$ 83,119	$ 134,655

Intangible Assets - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 0.6		$ 0.6		$ 0.6
Amortization expense	$ 6.1	$ 4.9	$ 20.8	$ 16.5

Intangible Assets - Schedule of Intangible Assets, Other than Goodwill (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Intangible Assets Net Excluding Goodwill [Line Items]
Total intangible assets, Gross Carrying Amount	$ 209,600	$ 193,651
Amortized intangible assets, Gross Carrying Amount	177,317	161,368
Amortized intangible assets, Accumulated Amortization	(126,090)	(107,138)
Amortized intangible assets, Net Carrying Amount	51,227	54,230
Total intangible assets, Net Carrying Amount	83,510	86,513
FCC Licenses [Member]
Intangible Assets Net Excluding Goodwill [Line Items]
Total unamortized intangible assets, Gross Carrying Amount	32,283	32,283
Total unamortized intangible assets, Net Carrying Amount	$ 32,283	32,283
Software [Member]
Intangible Assets Net Excluding Goodwill [Line Items]
Weighted Average Remaining Useful Life (in years)	2 years 2 months 12 days
Amortized intangible assets, Gross Carrying Amount	$ 159,512	145,063
Amortized intangible assets, Accumulated Amortization	(111,430)	(93,523)
Amortized intangible assets, Net Carrying Amount	$ 48,082	51,540
Service Customer Relationships [Member]
Intangible Assets Net Excluding Goodwill [Line Items]
Weighted Average Remaining Useful Life (in years)	1 year 7 months 6 days
Amortized intangible assets, Gross Carrying Amount	$ 8,081	8,081
Amortized intangible assets, Accumulated Amortization	(6,550)	(5,788)
Amortized intangible assets, Net Carrying Amount	$ 1,531	2,293
Other Intangible Assets [Member]
Intangible Assets Net Excluding Goodwill [Line Items]
Weighted Average Remaining Useful Life (in years)	5 years 1 month 6 days
Amortized intangible assets, Gross Carrying Amount	$ 3,000	1,500
Amortized intangible assets, Accumulated Amortization	(1,386)	(1,103)
Amortized intangible assets, Net Carrying Amount	1,614	397
OEM and Dealer Relationships [Member]
Intangible Assets Net Excluding Goodwill [Line Items]
Amortized intangible assets, Gross Carrying Amount	6,724	6,724
Amortized intangible assets, Accumulated Amortization	$ (6,724)	$ (6,724)

Intangible Assets - Summary of Amortization Expenses (Detail) $ in Thousands	Sep. 30, 2018 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2018 (period from October 1 to December 31)	$ 6,524
2019	20,550
2020	12,829
2021	7,130
2022	2,441
Thereafter	$ 1,753

Warranties - Additional Information (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Guarantor Obligations [Line Items]
Warranty reserve balance	$ 10,302	$ 2,424
Minimum [Member]
Guarantor Obligations [Line Items]
Warranty term	2 years
Maximum [Member]
Guarantor Obligations [Line Items]
Warranty term	5 years

Long-Term Debt and Other Liabilities - Schedule of Long-Term Debt (Detail) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017	Mar. 03, 2015
Debt Instrument [Line Items]
Total debt	$ 1,031,064	$ 1,017,064
Less deferred financing costs	(13,053)	(16,196)
Total long-term debt	1,018,011	1,000,868
3.75% Convertible Senior Notes [Member]
Debt Instrument [Line Items]
Convertible Notes	327,653	311,544	$ 261,900
12.500% Senior Secured Notes Due 2022 [Member]
Debt Instrument [Line Items]
Senior Secured Notes	$ 703,411	$ 705,520

Long-Term Debt and Other Liabilities - Additional Information (Detail) $ / shares in Units, shares in Millions						3 Months Ended		9 Months Ended
	Sep. 25, 2017 USD ($)	Sep. 20, 2017 USD ($)	Jan. 03, 2017 USD ($)	Jun. 14, 2016 USD ($)	Mar. 03, 2015 USD ($) $ / shares shares	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2018 USD ($) Trading_day shares	Sep. 30, 2017 USD ($) shares	Dec. 31, 2017 USD ($)	Sep. 19, 2017 USD ($)
Debt Instrument [Line Items]
Proceeds from issuance of debt									$ 181,843,000
Total debt						$ 1,031,064,000		$ 1,031,064,000		$ 1,017,064,000
Amortization of deferred financing costs						1,060,000	$ 919,000	3,143,000	$ 2,718,000
Additional paid-in-capital						911,341,000		$ 911,341,000		898,729,000
Forward stock repurchase transactions amount					$ 140,000,000
Forward stock repurchase transaction, shares \| shares								7.2	7.2
Letters of Credit [Member]
Debt Instrument [Line Items]
Restricted cash						6,900,000		$ 6,900,000		7,400,000
Convertible Notes [Member]
Debt Instrument [Line Items]
Forward stock repurchase transaction, shares \| shares					7.2
Forward stock repurchase transaction, settlement date					Mar. 01, 2020
12.500% Senior Secured Notes Due 2022 [Member]
Debt Instrument [Line Items]
Aggregate principal amount				$ 525,000,000
Interest rate				12.50%
Unamortized debt premium and consent fees						13,400,000		$ 13,400,000		15,500,000
Interest rate payable term								Semi-annually
Maturity date								Jul. 01, 2022
Loan origination fees								$ 11,400,000
Amortization of deferred financing costs						700,000	500,000	2,000,000	$ 1,600,000
Debt issuance costs						10,700,000		$ 10,700,000		12,600,000
12.500% Senior Secured Notes Due 2022 [Member] \| Condition One [Member]
Debt Instrument [Line Items]
Debt instrument redemption price percentage of principal amount redeemed								35.00%
Debt instrument redemption price, percentage								112.50%
Outstanding redemption percentage								65.00%
12.500% Senior Secured Notes Due 2022 [Member] \| Condition Two [Member]
Debt Instrument [Line Items]
Debt instrument redemption price, percentage				100.00%
12.500% Senior Secured Notes Due 2022 [Member] \| Condition Three [Member]
Debt Instrument [Line Items]
Debt instrument redemption price, percentage				101.00%
12.500% Senior Secured Notes Due 2022 [Member] \| Additional Notes [Member] \| January Two Thousand And Seventeen Additional Notes [Member]
Debt Instrument [Line Items]
Aggregate principal amount			$ 65,000,000
Interest rate			12.50%
Issue price as percentage of face value			108.00%
Proceeds from issuance of debt			$ 70,200,000
Loan origination fees								$ 2,000,000
12.500% Senior Secured Notes Due 2022 [Member] \| Additional Notes [Member] \| September Two Thousand And Seventeen Additional Notes [Member]
Debt Instrument [Line Items]
Aggregate principal amount	$ 100,000,000
Interest rate	12.50%
Issue price as percentage of face value	113.00%
Proceeds from issuance of debt	$ 113,000,000
Accrued interest received	$ 2,900,000
Loan origination fees								2,500,000
12.500% Senior Secured Notes Due 2022 [Member] \| Supplemental Indenture [Member]
Debt Instrument [Line Items]
Aggregate principal amount		$ 175,000,000									$ 75,000,000
Increase in debt amount		100,000,000
Additional secured indebtedness		50,000,000
Additional dividends		15,000,000
Consent fees paid		$ 1,400,000
3.75% Convertible Senior Notes [Member]
Debt Instrument [Line Items]
Aggregate principal amount					$ 361,900,000	361,900,000		$ 361,900,000		361,900,000
Interest rate					3.75%
Interest rate payable term								Semi-annually
Maturity date					Mar. 01, 2020
Amortization of deferred financing costs						400,000	$ 400,000	$ 1,200,000	$ 1,100,000
Debt issuance costs						2,400,000		2,400,000		3,600,000
Debt instrument redemption price, percentage					100.00%
Option granted to initial purchasers					$ 60,000,000
Additional paid-in-capital					100,000,000
Convertible Notes, carrying amount of liability component					261,900,000	$ 327,653,000		$ 327,653,000		311,544,000
Effective interest rate on convertible notes						11.50%		11.50%
Proceeds received from the issuance of the convertible notes					$ 361,900,000
Convertible Notes, unamortized discount						$ 34,300,000		$ 34,300,000		50,400,000
Conversion rate					41.9274
Principal amount					$ 1,000
Conversion price \| $ / shares					$ 23.85
Multiples of principal amount					$ 1,000
3.75% Convertible Senior Notes [Member] \| Minimum [Member]
Debt Instrument [Line Items]
Percentage of common share price over conversion price for conversion								130.00%
Common stock price trading days \| Trading_day								20
Common stock price consecutive trading days \| Trading_day								30
3.75% Convertible Senior Notes [Member] \| Maximum [Member]
Debt Instrument [Line Items]
Debt instrument redemption price, percentage								98.00%
Common stock price trading days \| Trading_day								5
Common stock price consecutive trading days \| Trading_day								5
3.75% Convertible Senior Notes [Member] \| Issuance Costs [Member]
Debt Instrument [Line Items]
Loan origination fees								$ 10,400,000
Additional paid-in-capital						2,900,000		2,900,000
Issuance cost recorded to deferred financing costs						7,500,000		7,500,000
3.75% Convertible Senior Notes [Member] \| Institutional Buyers [Member]
Debt Instrument [Line Items]
Aggregate principal amount					340,000,000
Principal amount of Convertible Notes, subsequently exercised					$ 21,900,000
Senior Secured Notes [Member]
Debt Instrument [Line Items]
Aggregate principal amount						690,000,000		690,000,000		690,000,000
Total debt						$ 703,411,000		$ 703,411,000		$ 705,520,000

Long-Term Debt and Other Liabilities - Summary of Redemption Prices Plus Accrued and Unpaid Interest (Detail) - 12.500% Senior Secured Notes Due 2022 [Member]	9 Months Ended
	Sep. 30, 2018
2019 [Member]
Debt Instrument, Redemption [Line Items]
Debt instrument redemption price, percentage	106.25%
2020 [Member]
Debt Instrument, Redemption [Line Items]
Debt instrument redemption price, percentage	103.125%
2021 and Thereafter [Member]
Debt Instrument, Redemption [Line Items]
Debt instrument redemption price, percentage	100.00%

Interest Costs - Summary of Interest Costs (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Schedule Of Interest [Line Items]
Interest costs charged to expense	$ 24,887	$ 21,936	$ 74,795	$ 65,164
Amortization of deferred financing costs	1,060	919	3,143	2,718
Accretion of debt discount on Convertible Notes	5,517	4,945	16,109	14,438
Amortization of debt premium on Senior Secured Notes	(721)	(215)	(2,109)	(566)
Interest expense	30,743	27,585	91,938	81,754
Total interest costs	30,851	27,787	92,168	82,573
Property and Equipment [Member]
Schedule Of Interest [Line Items]
Interest costs capitalized	7	9	22	15
Software [Member]
Schedule Of Interest [Line Items]
Interest costs capitalized	$ 101	$ 193	$ 208	$ 804

Leases - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Leases [Line Items]
Amortization of deferred airborne lease incentives	$ 8,074	$ 10,121	$ 23,166	$ 28,099
Deferred airborne lease incentives included in current liabilities	25,877		25,877		$ 42,096
Deferred airborne lease incentives included in non-current liabilities	129,865		129,865		142,938
Revenue share expense, net of amortization of deferred airborne lease incentives	5,500	7,700	18,600	26,900
Property and equipment, gross	915,248		915,248		1,053,923
Present value of net minimum lease payments	1,567		1,567
Present value of net minimum lease payments, current portion	1,233		1,233		1,789
Present value of net minimum lease payments, non-current portion	400		400
Leased Computer Equipment [Member]
Leases [Line Items]
Property and equipment, gross	5,300		5,300		5,000
Leased Network Equipment [Member]
Leases [Line Items]
Property and equipment, gross	7,500		7,500		$ 7,500
Certain Facilities and Equipment [Member]
Leases [Line Items]
Rental expense	3,300	3,000	9,400	9,000
Cell Site Leases [Member]
Leases [Line Items]
Rental expense	$ 2,600	$ 2,300	$ 7,900	$ 7,000
Minimum [Member] \| Computer Equipment [Member]
Leases [Line Items]
Annual interest rate imputed			8.00%
Maximum [Member] \| Computer Equipment [Member]
Leases [Line Items]
Annual interest rate imputed					14.00%

Leases - Annual Future Minimum Obligations for Operating Leases Other than Arrangements with Commercial Airline Partners (Detail) $ in Thousands	Sep. 30, 2018 USD ($)
Leases [Abstract]
2018 (period from October 1 to December 31)	$ 5,760
2019	21,641
2020	19,680
2021	19,567
2022	18,272
Thereafter	$ 92,599

Leases - Annual Future Minimum Obligation under Capital Leases (Detail) $ in Thousands	Sep. 30, 2018 USD ($)
Leases [Abstract]
2018 (period from October 1 to December 31)	$ 385
2019	1,053
2020	222
Thereafter	0
Total minimum lease payments	1,660
Less: Amount representing interest	(93)
Present value of net minimum lease payments	$ 1,567

Commitments and Contingencies - Additional Information (Detail) - USD ($)	1 Months Ended	9 Months Ended
	Jun. 30, 2018	Sep. 30, 2018
Loss Contingencies [Line Items]
2018		$ 21,500,000
2019		85,700,000
2020		82,700,000
2021		70,200,000
2022		62,800,000
Thereafter		$ 216,500,000
Contingent annual cash rebate	$ 1,800,000
Pending Litigation [Member]
Loss Contingencies [Line Items]
Litigation filing date		June 27,2018
Potential losses accrued		$ 0
Linksmart Litigation [Member]
Loss Contingencies [Line Items]
Litigation filing date		April 20,2018
Securities Litigation [Member]
Loss Contingencies [Line Items]
Litigation filing date		June 27,2018
Potential losses accrued		$ 0
Derivative Litigation [Member]
Loss Contingencies [Line Items]
Litigation filing date		September 25,2018 and September 26,2018

Fair Value of Financial Assets and Liabilities - Summary of Fair Value and Carrying Value of Long-Term Debt (Detail) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total debt	$ 1,031,064	$ 1,017,064
Convertible Notes [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value of Convertible Notes	342,000	330,000
Carrying Value of Convertible Notes	327,653	311,544
Senior Secured Notes [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value of Long Term Debt	758,000	782,000
Total debt	$ 703,411	$ 705,520

Fair Value of Financial Assets and Liabilities - Summary of Fair Value and Carrying Value of Long-Term Debt (Parenthetical) (Detail) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
3.75% Convertible Senior Notes [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Convertible Notes, unamortized discount	$ 34.3	$ 50.4
12.500% Senior Secured Notes Due 2022 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Unamortized debt premium and consent fees	$ 13.4	$ 15.5

Income Tax - Additional Information (Detail) - USD ($)	3 Months Ended		9 Months Ended
Income Tax - Additional Information (Detail) - USD ($)	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Effective income tax rate	(0.50%)	(0.80%)	3.30%	(0.70%)
Reduction in our valuation allowance due to tax reform			$ 4,000,000
Interest or penalties related to uncertain tax positions	$ 0	$ 0	0	$ 0
Liabilities for interest and potential penalties	$ 0		0		$ 0
Increase (decrease) in unrecognized tax benefits			$ 0

Business Segments and Major Customers - Additional Information (Detail) $ in Millions	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018 USD ($) Segment	Sep. 30, 2017	Dec. 31, 2017
Segment Reporting Information [Line Items]
Number of operating segments \| Segment			3
American Airlines [Member] \| Transition Agreements To Airline-directed Model [Member]
Segment Reporting Information [Line Items]
Equipment revenue \| $			$ 45.4
Revenue [Member] \| Customer Concentration Risk [Member] \| American Airlines [Member]
Segment Reporting Information [Line Items]
Percentage of benchmark	18.00%	21.00%	25.00%	22.00%
Revenue [Member] \| Customer Concentration Risk [Member] \| Delta Air Lines [Member]
Segment Reporting Information [Line Items]
Percentage of benchmark	25.00%	26.00%	23.00%	26.00%
Accounts Receivable [Member] \| Customer Concentration Risk [Member]
Segment Reporting Information [Line Items]
Percentage of benchmark			21.00%		15.00%
Accounts Receivable [Member] \| Customer Concentration Risk [Member] \| American Airlines and Other Customer One [Member]
Segment Reporting Information [Line Items]
Percentage of benchmark			10.00%
Accounts Receivable [Member] \| Credit Concentration Risk [Member] \| Delta Air Lines [Member]
Segment Reporting Information [Line Items]
Percentage of benchmark			11.00%		21.00%

Business Segments and Major Customers - Summary of Reportable Segments (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Segment Reporting Information [Line Items]
Total revenue	$ 217,257	$ 172,874	$ 676,540	$ 511,080
Segment profit (loss)	21,130	13,185	51,750	33,894
Service [Member]
Segment Reporting Information [Line Items]
Total revenue	160,376	153,347	470,110	453,918
Product [Member]
Segment Reporting Information [Line Items]
Total revenue	56,881	19,527	206,430	57,162
CA-NA [Member]
Segment Reporting Information [Line Items]
Total revenue	108,470	95,727	371,941	295,494
Segment profit (loss)	8,699	15,966	17,396	43,316
CA-NA [Member] \| Service [Member]
Segment Reporting Information [Line Items]
Total revenue	93,443	94,436	277,972	290,260
CA-NA [Member] \| Product [Member]
Segment Reporting Information [Line Items]
Total revenue	15,027	1,291	93,969	5,234
CA-ROW [Member]
Segment Reporting Information [Line Items]
Total revenue	35,197	16,640	88,011	40,999
Segment profit (loss)	(22,747)	(24,110)	(69,826)	(82,068)
CA-ROW [Member] \| Service [Member]
Segment Reporting Information [Line Items]
Total revenue	17,646	15,687	47,076	38,243
CA-ROW [Member] \| Product [Member]
Segment Reporting Information [Line Items]
Total revenue	17,551	953	40,935	2,756
BA [Member]
Segment Reporting Information [Line Items]
Total revenue	73,590	60,507	216,588	174,587
Segment profit (loss)	35,178	21,329	104,180	72,646
BA [Member] \| Service [Member]
Segment Reporting Information [Line Items]
Total revenue	49,287	43,224	145,062	125,415
BA [Member] \| Product [Member]
Segment Reporting Information [Line Items]
Total revenue	$ 24,303	$ 17,283	$ 71,526	$ 49,172

Business Segment and Major Customers - Reconciliation of Segment Profit (loss) (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Segment profit (loss)	$ 21,130	$ 13,185	$ 51,750	$ 33,894
Interest income	903	683	3,307	1,999
Interest expense	(30,743)	(27,585)	(91,938)	(81,754)
Depreciation and amortization	(32,590)	(35,824)	(100,447)	(96,821)
Transition to airline-directed model			21,551
Amortization of deferred airborne lease incentives	8,074	10,121	23,166	28,099
Amortization of STC costs	(292)		(719)
Stock-based compensation expense	(3,932)	(5,283)	(12,531)	(15,007)
Other income (expense)	(72)	(228)	59	(322)
Loss before income taxes	(37,522)	(44,931)	(105,802)	(129,912)
CA-NA [Member]
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Segment profit (loss)	8,699	15,966	17,396	43,316
CA-ROW [Member]
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Segment profit (loss)	(22,747)	(24,110)	(69,826)	(82,068)
BA [Member]
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Segment profit (loss)	$ 35,178	$ 21,329	$ 104,180	$ 72,646

Employee Retirement and Postretirement Benefits - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Employee Benefit Plans [Line Items]
Stock options, shares granted			2,450,330
Stock options, shares exercised			2,500
Stock options, shares forfeited			776,246
Stock options, shares expired			1,078,948
Employee Contribution			100.00%
Percentage of employees contribution matched by the company			4.00%
Employer Contribution	$ 1.2	$ 1.2	$ 3.8	$ 4.0
Employee Stock Purchase Plan [Member]
Employee Benefit Plans [Line Items]
Common stock, shares issued under ESPP			231,761
Market Condition [Member]
Employee Benefit Plans [Line Items]
Stock options, shares granted			660,242
Stock options, shares forfeited			333,451
Share units granted			216,183
Share units forfeited			108,701
Restricted Stock Units (RSUs) [Member]
Employee Benefit Plans [Line Items]
Share units granted			2,530,236
Share units vested			463,803
Share units forfeited			450,053
Restricted Stock [Member]
Employee Benefit Plans [Line Items]
Share units vested			93,266
Deferred Stock Units [Member]
Employee Benefit Plans [Line Items]
Share units granted			104,511
Share units vested			104,511

Employee Retirement and Postretirement Benefits - Summary of Stock-Based Compensation Expense by Operating Expense (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expense	$ 3,932	$ 5,283	$ 12,531	$ 15,007
Cost of Service Revenue [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expense	303	542	1,184	1,332
Cost of Equipment Revenue [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expense	33	49	146	136
Engineering, Design and Development [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expense	812	897	2,505	2,801
Sales and Marketing [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expense	901	1,305	3,209	3,473
General and Administrative [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expense	$ 1,883	$ 2,490	$ 5,487	$ 7,265

Research and Development Costs - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Research and Development [Abstract]
Research and development expense	$ 19.2	$ 18.6	$ 56.3	$ 57.9