About Face! American Airlines Drops Lawsuit Against Gogo

That was quick!  Less than a week ago we learned that American Airlines had filed suit against Gogo.  American was seeking a declaratory judgment that would allow them to start competing the contract for in-flight internet on a decent chunk of their fleet.  Essentially, American believed/believes that there are better and cheaper products on the market and they want the ability to play the field as opposed to sticking only with Gogo(Wandering Aramean has the complete filing if you want to read the brief AA filed).

It seemed that American was pretty quick to file suit in the first place, so I guess this isn’t a terrible surprise.  There was some obvious premeditation here since it takes more than an hour or two to put together a filing of that nature (though probably not much longer if you pay your lawyers enough money).

Seth notes in another post that Gogo acknowledged AA’s right to exercise this option in their contract.  Even after filing that declaration with the SEC, the stock still remained low though it did recover some.  It’s up another 15%-ish at the time I’m writing this.  Correspondingly to some degree, ViaSat was down sharply but has mostly rebounded.

The Last Two Pennies

My two cents?  The market is probably pricing in some belief that even with the lawsuit gone, American is likely to decide they want ViaSat or another competitor to replace Gogo on at least a portion of their fleet.

That’s not too hard to believe given the success ViaSat is having with folks like JetBlue.  But, wanting to switch and actually doing so are drastically different things.  American hasn’t shown a strong desire to fork out cash to replace these older in-flight internet systems.  It’s believed that Gogo financed a decent portion of the equipment and install costs for the original outfit of these planes.  ViaSat, or possibly Panasonic (who’s trying to go very big in this space) may be willing to provide some sort of financing for American Airlines.  Remember that Panasonic already has a test going with American on some international long-haul planes.

What’s next?  Faster internet on American Airlines planes seems likely, but it’s going to be a while.

5 Comments

  1. Whatever system AA has on its HKG flights (Panasonic?) was atrocious the four times I’ve used it. Gogo is pretty bad when their network gets full, but the extra $20 or so I paid per flight transpacific was essentially wasted. If that system is their holy grail, well, it’s not.

    1. SST, all the AA international planes are equipped with Panasonic right now, AFAIK. I believe Gogo’s 2kU is the only comparable system they offer and that isn’t operational in a customer setting yet.

    1. We mostly agree, but considering that the filing was obviously prepared well in advance of the brief period of miscommunication between the two parties, I suspect AA’s point for the filing may have been more premeditated than a reaction to stalling.

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