Iridium's (IRDM +6.4%) Aireon venture, provider of (according to Iridium) the world's first air traffic surveillance system to rely on satellites, is receiving $120M in investments from three air navigation service providers: Denmark's Navair, Italy's ENAV, and the Irish Aviation Authority. (PR)
The investments have strings attached: They'll give the investors preferred interests, will be provided in tranches from 2014-2017, and require Aireon to redeem part of Iridium's stake in the company, likely in 2018. Following the redemption, Iridium will have only a 24.5% stake in Aireon. NAV Canada will own 51%.
But Iridium may be less interested in its equity stake than its ability to profit from sales to Aireon. In tandem with the investments, Aireon has promised to pay Iridium in hosting fees for placing receiver payloads on Iridium NEXT satellites, and nearly $300M in data service fees through 2030.
Aireon declares its solution, which allows air traffic surveillance to be extended to oceans and remote areas, will deliver "increased efficiencies and fuel savings" for airlines.