Aireon partner invests $69 million in space-based aircraft tracking system
Updated Nov. 4 at 6:48 p.m. Eastern with correct Aireon ownership numbers.
WASHINGTON — Aireon raised $69 million from a British partner, enabling the aircraft-tracking startup to begin making hosting payments to Iridium Communications.
NATS, the United Kingdom’s privatized air traffic management company, will take a 10 percent equity stake in McLean, Virginia-based Aireon under the deal announced here May 16.
“With this investment we will begin to make hosting fees to Iridium,” Aireon Chief Executive Don Thoma said at a press conference.
Aireon’s network of aircraft-tracking sensors is built onto the Iridium Next satellites as hosted payloads. The Harris-built sensors enable ADS-B, or Automatic Dependent Surveillance-Broadcast flight tracking, from space, extending flight monitoring beyond the reach of land-based radar stations.
Initially viewed as a means to support Iridium’s funding of the $3 billion Iridium Next constellation, Aireon’s business case has not closed as quickly as hoped. Iridium borrowed $360 million in March as a hedge against counting on Arieon, which owes Iridium $200 million in hosting fees.
“We’ve ensured that our liquidity is not reliant on expected payments from Aireon,” Iridium Chief Financial Officer Thomas Fitzpatrick said during an earnings call last month.
Thoma said Aireon will pay down the hosting fee “over the course of the next several years as the business becomes available and capable of making those payments.” In an interview with SpaceNews following the press conference, Thoma said Arieon’s agreement with Iridium is built on amicable terms that prioritize Aireon’s success.
“They are at the top of the list of payments that we make, but they occur when the company is in a position to pay them either through investment, raising additional capital or through cash flows of the business,” he said.
If Aireon raises additional capital, it would go towards paying down the hosting fee, he said. Aireon has raised $351 million to date.
New ownership structure
Thoma said the NATS investment dilutes the ownership stake of Aireon’s five shareholders. Prior to NATS, Aireon’s ownership was:
- Iridium – 39.33
- Nav Canada – 40.94
- ENAV – 10.07
- Naviair – 4.83
- IAA – 4.83
Thoma declined to quantify the new ownership of each company beyond saying Nav Canada will no longer be majority owner and that NATS and ENAV will have roughly equal stakes.
Iridium later told SpaceNews the ownership stakes after the NATS investment are as follows:
- Iridium – 35.7
- Nav Canada – 37.2
- ENAV – 9.1
- Naviair – 4.4
- NATS – 9.1
- IAA – 4.4
“Certainly Nav Canada will remain the largest single shareholder, but no single shareholder will have a majority stake in the company,” he said. “It really talks to the partnership approach and the state of the system.”
Speaking at the press conference, Marc Courtois, chair of the board of directors at Aireon and Nav Canada, embraced NATS as a new partner.
“NATS was the first air navigation service provider to sign a non-investor customer service agreement in 2014,” he said. “They were confident even then that space-based ADS-B would provide significant operational benefits to the airline customers by optimizing flight paths, routes and tracks, offering fuel savings and increasing safety.”
Nav Canada and NATS will begin trials with Aireon flight tracking in 2019 for transatlantic flights between North America and Europe, a region Courtois described as “the busiest oceanic airspace in the world.”
“It’s also at full capacity unless we fundamentally change how we operate it,” added NATS Chief Executive Martin Rolfe. The near-real-time position data Aireon is poised to supply will enable planes traversing oceanic routes to use flight paths 15 nautical miles apart instead of 40 nautical miles apart and still meet safety targets from the International Civil Aviation Organization, Rolfe said.
“Transformation is a word that is perhaps overused these days, but it is absolutely warranted here,” he said. “The safety, capacity, emissions and fuel benefits that Aireon’s solution can deliver for our airline customers are truly compelling.”
By NATS’ estimates, letting airlines take optimized flight paths at desired speeds can save $300 in fuel and reduce carbon dioxide emissions by two tons per flight, Rolf said.
Courtois said he is hopeful NATS and Nav Canada will be the first to use Aireon services when the constellation is fully operational.
Aireon has 50 hosted payloads in orbit today, and five more launching on Iridium’s next mission, scheduled for May 22 on a SpaceX Falcon 9 rocket. The full Iridium Next constellation, and by extension the full Aireon constellation, is tracking for completion in the fall. Like Iridium Next, Aireon’s network will also consist of 66 active spacecraft, nine in-orbit spares and six ground spares. Courtois said Aireon’s service will start later this year.
Upgrades for FAA
One prospect Aireon and Iridium both expected to have long since become a customer of Aireon is the U.S. Federal Aviation Administration. Thoma said Aireon is under contract with its payload manufacturer Harris Corp. “to provide some updates to the Aireon system to meet some unique requirements of the FAA.” The FAA is making procurement decisions now, he said.
“We’re very hopeful that under our agreement with Harris [the FAA] will be connecting to our network later this year,” Thoma said.