Boeing to end in-flight Internet service

It's phasing out Connexion by Boeing after six years

The Boeing Co. today announced that it has decided to exit the high-speed broadband communications connectivity market and will work with customers to phase out its Connexion by Boeing service.

"Over the last six years, we have invested substantial time, resources and technology in Connexion by Boeing," Boeing Chairman, President and CEO Jim McNerney said in a statement. "Regrettably, the market for this service has not materialized as had been expected. We believe this decision best balances the long-term interests of all parties with a stake in Connexion by Boeing."

Boeing now expects a pretax charge of up to $320 million, or 26 cents per share, in the second half of 2006, with about $290 million of that amount taken in the third quarter and the rest in the fourth quarter. The company also expects a benefit to earnings of about 15 cents per share next following its decision to end investments in Connexion.

The charge relates to writing down assets, paying early termination fees and other costs related to shutting down the service, according to Boeing. The company said it expects the majority of Connexion employees to find other jobs at Boeing.

In late June, Boeing had acknowledged it was reviewing the Connexion business. That effort included an assessment of the market and discussions with existing customers and potential new business partners. At the time, Boeing said it had pursued the business vigorously, developing technology that worked well and was useful.

But the market for the service never developed as expected, the company said.

Copyright © 2006 IDG Communications, Inc.

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