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Gogo, the provider of Internet service saw its stock dive by 16% Friday after the largest airline in the U.S., American Airlines ended its relationship with the company and signed a new deal with ViaSat, which will provide WiFi that is satellite powered to his fleet of aircraft.
American Airlines, worried due to Gogo’s poor performance of its current Internet service, filed a suit during mid February, that notified that it had located an Internet service that was faster offered by Gogo’s rival ViaSat.
Gogo at that time said it was going to submit a counter proposal to American Airlines.
In its February lawsuit that was filed in a court in Texas, the U.S. based airline asked the presiding judge to give the airline permission to break the existing contract it has with Gogo.
The contract that American Airlines signed with Gogo contained a clause that allowed the airline to switch its Internet provider if it were to find one that improves materially on the current offering by Gogo.
American Airlines, as per its new contract, will outfit 100 new Boeing 737 aircraft with the in-flight service of Internet provided by ViaSat before next September.
In a prepared statement, ViaSat said that the new planes of American Airlines will tap into the ViaSat powerful, high-capacity advanced Ka-Band satellite, that will include its ViaSat 1, 2 and 3 satellite platforms.
In 2019, when the first ViaSat satellite platform is scheduled to be launched, it will double the capacity once again for the Internet aboard the American Airlines fleet.
CEO and chairman of ViaSat, Mark Dankberg said the company believes it is now approaching another end of one era where the passengers prices that were very high for connections that were very slow.
The new agreement, added Dankberg highlights the substantial first step for American Airlines to deliver an WiFi experience onboard that each and every one of its passengers will want to use.
Gogo is reportedly going to continue providing its Internet service to part of the American fleet, which includes 134 of its Airbus aircraft, of which were outfitted with the providers WiFi satellite 2Ku service.
Last Friday, Gogo’s stock dropped by over 16% ending the day at $9.30 and stock at American Airlines was down over 2.72% to end trading at $30.81. Shares of ViaSat were up on the day by 4.52% to end trading for the week at $73.09.