American Airlines Seeks Split From Gogo

Meanwhile, American Airlines fell 0.7% to $390.30 and ViaSat jumped 10.74% to $69.16.

Gogo said in a statement that it is looking forward to “resolving the disagreement regarding contract interpretation that led to this declaratory judgment action”.

Gogo has commented on the news of the American Airlines’ lawsuit to drop it. Switching to ViaSat will give AAL the same internet service provider as JetBlue (JBLU), United Airlines (UAL) and Virgin America (VA), Business Insider notes.

Shares of Gogo tanked almost 40 percent in early trading on Tuesday, following a report that American Airlines is dropping the internet service provider from its flights.

On Friday, the Fort Worth-based airline filed a lawsuit in Tarrant County District Court seeking a ruling on a disputed clause in its 2012 agreement with Gogo.

The airline believes it has a better offer from a competitor and wants out of its Gogo contract.

While Gogo has been working to roll out its own faster satellite-based service – the one mentioned in its filing today – there are concerns over how fast it can do that, and what the pricing will look like. The Company operates through three segments: Commercial Aviation North America (NASDAQ:GOGO), Commercial Aviation Rest of World (CA-ROW) and Business Aviation (BA).

Gogo is the largest in-flight WiFi company in the country, providing Internet connectivity to more than 9,000 commercial aircraft.

According to its contract, Gogo is allowed to submit a competing proposal which Gogo said it intends to do related to its satellite technology, 2Ku.

The company’s service is largely based on older ground-to-air technology that offers limited bandwidth and speeds, something competitors have started to eclipse in recent years with satellite-based technology.

Gogo has said the 2Ku rollout will be slow, however. ViaSat is 2.5% higher premarket.

American Airlines opens lawsuit against in-flight internet provider Gogo