(Reuters) - Satellite communications company Iridium Communications Inc (IRDM.O) entered into a joint venture with Nav Canada to allow air traffic authorities such as the U.S. Federal Aviation Agency (FAA) to track aircraft around the globe in real time.
The joint venture, to be named Aireon LLC, will be headed by Iridium’s Executive Vice President Donald Thoma, the company’s Chief Executive Matt Desch told Reuters.
Nav Canada, an Air Navigation Service Providers (ANSP) which provides air traffic control, flight information and weather briefings, will be Aireon’s first customer, Desch said.
“I hope the FAA is our second customer,” the CEO added.
Aireon will pay Iridium about $200 million by 2015 to get hosted payloads into space.
Hosted payloads allow customers to have their own dedicated space on a satellite.
CEO Desch declined to say how much Aireon will add to revenue after 2015, but said the amount “will not be insignificant.”
Air traffic authorities need to keep aircraft widely-spaced due to the lack of radar visibility over oceanic airspace. Aireon will provide complete visibility to all aircraft everywhere, helping ANSPs decrease inefficiencies.
Aireon’s service will use receivers built into 66 satellites in Iridium’s second-generation constellation NEXT, to deliver this capability.
Aireon is expected to generate about $200 million in one-time hosting fees for the integration and launch of the payloads between 2014 and 2017.
Iridium plans to own about 40 percent to 50 percent of Aireon by 2015, when NEXT will be launched, Desch said.
The company also expects to draw in other investors for the joint venture over the next two to three years.
Reuters reported earlier this month that the company was in talks with aviation authorities such as the FAA to offer them hosted payloads on the new constellation.
Shares of Iridium, which has a market capitalization of about $650 million, were slightly up at $8.95 on Tuesday on the Nasdaq. (Reporting by Sagarika Jaisinghani in Bangalore; Editing by Roshni Menon)