American Airlines drops lawsuit over Gogo in-flight Wi-Fi

The suit provoked more than 140 news articles about the inflight Internet service, many of which were a public relations disappointment for Gogo (Buzzfeed: “American Airlines Is Suing Gogo Over Its Crappy In-Flight WiFi”, Wired: “American Airlines Sues Gogo Over God-Awful Inflight Wi-Fi”). (NASDAQ:VSAT), which offers better connectivity services; in this regard, the latter was expected to be approached by the American Airlines.

According to Bloomberg, Gogo’s stock jumped 10% to $11.05 in NY. The contract covers Wi-Fi service for approximately 200 airplanes operated by American Airlines.

The lawsuit claims that ViaSat Inc is servicing airlines, including Virgin America, United Airlines, and JetBlue Airways. However, the case was dismissed without prejudice, according to the Star-Telegram, which means that American can still refile the lawsuit at some point in the future if it finds the need to do so.

Gogo said in an SEC filing last week that it has until late March to submit a counterproposal to American.

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. The Chicago-based company also stated that it will definitely offer a better proposal to retain their contract with the airline. 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.

“Gogo may chose to submit a proposal in response to the competitive offering”, American’s Mr. Norton said.