Shares of Gogo Inc (NASDAQ: GOGO), a provider of
aero communications services including in-flight Internet access, plunged 30 percent Tuesday morning after a report from Star Telgram said that American
Airlines Group Inc (NASDAQ: AAL) is suing Gogo and
looking to switch Internet providers.
American Airlines is allowed to terminate or renegotiate its contract with Gogo if it finds a competing company that offers a
superior service to Gogo.
American Airlines said that ViaSat is able to offer a superior service to Gogo and is already installed on United
Airlines, Jet Blue and Virgin America planes. As such, American Airlines "has decided to exercise its
rights under the Agreement and recently notified Gogo that ViaSat offers an in-flight connectivity system that materially improves
on Gogo's air-to-ground system."
Gogo plans on submitting a competing proposal.
"We have no comment on the merits of this litigation, but 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 in a statement late Monday night.
Gogo shares traded recently at $9.85, down $4 or 29.4 percent.
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