Gogo Inc. says American Airlines has dismissed its lawsuit seeking to break a contract over inflight Internet service. An American Airlines spokesperson confirmed that it had dismissed the suit without prejudice. The contract covers Wi-Fi service for approximately 200 airplanes operated by American Airlines. (NASDAQ:VSAT), which offers better connectivity services; in this regard, the latter was expected to be approached by the American Airlines. Gogo’s stock jumped as much as 24% after the news, the most since November 2013, according to Bloomberg.
According to the terms of American’s contract, if it receives a better proposal, Gogo gets a certain amount of time to make a counteroffer. American uses Gogo for its regional aircraft and on domestic flights and uses Panasonic to provide satellite-based Internet services for its global flights on its wide-body aircraft, like the Boeing Dreamliner and Boeing 777-300.
Gogo isn’t totally out of the woods though as American is still considering a switch to another provider.
The company was informed about ViaSat, Inc. The new proposal must be submitted within 45 days.
After Gogo said it would submit a bid to install its faster 2Ku satellite service on American’s fleet, the airline dropped the suit, according to a statement from Gogo.
“If Gogo chooses to submit a proposal in response to a competitive offering, we will evaluate it”, said Casey Norton, communications director for American.