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What happened
Shares of Global Eagle Entertainment (ENT) were surging today after the digital-media company extended its contract with Southwest Airlines (LUV 0.75%). The stock closed up 10.3%.
So what
Global Eagle specializes in providing internet connectivity for the travel industry, and Southwest is its biggest customer, contributing 23% of its revenue last year -- so an extension bodes well for Global Eagle. The companies agreed to extend their partnership from 2020 to 2025. Features include a full-term commitment to live television, transition to monthly recurring charge per aircraft for Wi-Fi and TV instead of the current fixed fee, and a significant increase in user experience and network performance.
Now what
Global Eagle stock spiked as much as 25% today, though the stock gave back some of those gains as investors seemed to think shares had been overbought. Digital connectivity for airlines is a growing field, and the extension of the Southwest agreement could help the company land additional airline clients. Global Eagle is hosting a webcast tomorrow morning at 8:30 a.m. EST to discuss the details of the agreement. The stock could move even higher depending on how management spins the news.
