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American drops lawsuit against in-flight Internet provider Gogo

American Airlines will soon allow customers with nut allergies to board early.
American Airlines will soon allow customers with nut allergies to board early. Star-Telegram

American Airlines dropped its lawsuit against its in-flight Internet provider, Gogo, on Monday after Gogo said it would submit a proposal to compete with another in-flight Internet technology company.

The Fort Worth-based carrier sued Gogo earlier this month, saying that its contract with Gogo allowed it to renegotiate or terminate its agreement if another company offered a better service. Gogo had disputed that clause in the contract, but Friday agreed to the contract provision and said it would provide a competitive bid within 45 days.

“American is a valued customer of Gogo, and Gogo looks forward to presenting a proposal to install 2Ku, our latest satellite technology, on the aircraft that are the subject of the AA Letter,” Gogo said in a government filing Friday. “We acknowledge the adequacy of the AA Letter and that our receipt of the AA Letter triggered the 45 day deadline under the agreement for submission of our competitive proposal.”

The airline dismissed the case “without prejudice,” which means American could refile the lawsuit at a later date if needed.

“American has dismissed the lawsuit without prejudice. If Gogo chooses to submit a proposal in response to a competitive offering, we will evaluate it,” the company said in a statement.

Once American reviews Gogo’s proposal, if it does not beat out a competitor’s proposal, American can terminate Gogo’s contract with 60 days’ notice.

Shares of Gogo [ticker: GOGO] jumped on the news of the dropped lawsuit, up almost 10 percent, or $1.00 to close at $11.05 on Monday.

About 200 American aircraft use Gogo’s air-to-ground technology to provide Wi-Fi during flight. In the lawsuit, American said ViaSat offers a faster service and is currently installed on United Airlines, JetBlue Airways and Virgin America planes.

American uses Gogo for its regional aircraft and on domestic flights, such as Boeing 737s. The airline uses Panasonic to provide satellite-based Internet services for its international flights on its wide-body aircraft, like the Boeing Dreamliner and Boeing 777-300.

Andrea Ahles: 817-390-7631, @Sky_Talk