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Thursday, August 17, 2006 - Page updated at 10:01 AM


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Boeing to end in-flight Internet service, take $320 million charge

The Associated Press

NEW YORK — Boeing Co. said today it would end its in-flight Internet service, Connexion, saying the market for it hadn't progressed fast enough.

The Chicago-based aerospace and aircraft maker also said it would take a $320 million charge for shutdown costs.

"Regrettably, the market for this service has not materialized as had been expected," Boeing Chairman and Chief Executive Jim McNerney said in a statement. "We believe this decision best balances the long-term interests of all parties with a stake in Connexion by Boeing."

Boeing said on June 26 it was considering selling or shutting down Connexion but held off on a decision until it met with its customers.

Many carriers flying over the Pacific Ocean used the service, including long-haul flights from Tokyo, Singapore and Seoul to Los Angeles, San Francisco, Chicago and New York.

Deutsche Lufthansa AG offered the service on about 50 flights. Scandinavian Airlines System, Japan Airlines Corp., Korean Air Co., All-Nippon Airways, Singapore Airlines Ltd. and China Airlines Ltd. also offered Connexion.

Connexion charged $26.95 for an entire long-haul flight, or $9.95 for an hour. Boeing also offered the service for commercial ships, initially charging $2,800 a vessel.

Boeing planned to make the service available on business jets in conjunction with Rockwell Collins Inc..

The $320 million charge for the shutdown amounts to 26 cents a share before tax for the rest of 2006, the majority of which will come in the third quarter. Earlier, Boeing said it could take up to a $350 million charge, or about 31 cents a share.

Boeing said ending the service, which began May 17, 2004, would lift 2007 earnings by about 15 cents a share.

Shares of Boeing rose 33 cents, or 0.4 percent, to $79.16 in early trading today on the New York Stock Exchange.

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