Gogo Inc. stock rose after American Airlines Group Inc. dropped a lawsuit against the in-flight internet provider over contract terms. The airlines decided to end the legal battle after Gogo claimed that it would submit a proposal to compete with another in-flight internet company. The news comes after the American Airlines has expressed its plan to change its in-flight Wi-Fi service provider covering approximately 200 of its 737 jets.
According to Bloomberg, Gogo's stock jumped 10% to $11.05 in New York. It is the biggest single-day increase in a period of three months following American Airline Company's announcement to cancel its lawsuit against the Chicago-based company. American filed a suit in Texas District Court against Gogo Inc earlier this month. American sought to have protection into its rights once it decided to shift to a company that provides better in-flight Wi-Fi services. The airline is considering ViaSat Inc., Gogo's competitor that offers faster internet service at a lower rate.
The lawsuit claims that ViaSat Inc is servicing airlines, including Virgin America, United Airlines, and JetBlue Airways. "Gogo can submit a proposal and we will evaluate their proposal when we receive it," said American spokesman Casey Norton adding the company will no longer pursue the lawsuit.
Gogo immediately submitted a proposal to beat its competitor's offer. It states that if American finds that ViaSat Inc. provides better offer, then it can freely terminate its contract with at a notice of at least 60 days, Nano News reports. Gogo claimed that it's planning to use its newest satellite technology, called 2Ku into the American Airline jets. The Chicago-based company also stated that it will definitely offer a better proposal to retain their contract with the airline.
"We would like to note that American is a valued customer of ours and that we look forward to resolving the disagreement regarding contract interpretation that led to this declaratory judgment action," Gogo said, Skift claims.
Whether American Airlines Group Inc will retain or not its contract with Gogo depends on the latter's proposal. It's just a matter of days before American decides on this matter while Gogo still enjoys the peak of its shares in the stock market.
