Gogo Inc shares tumbled 28 percent following the news about negative reaction from its customers. Gogo's customer American Airlines said its in-flight Wi-Fi service is not functioning properly. The US airline filed a lawsuit against Gogo for failure of Wi-fi service.
The Chicago-based technology company Gogo Inc provides in-flight Wi-Fi service airlines including American Airlines and Delta Airlines. The company has over 1,000 employees on the rolls. IN 2015, Gogo inaugurated its downtown headquarters. Gogo Inc shares fell 27.43 percent to $10.08 on Tuesday (16 February).
After the statement from American Airlines stating in-flight Wi-fi service is lacking, Gogo is planning to upgrade its technology. As per the contract signed with Gogo Inc, American Airlines can any time terminate the deal with Gogo in case the competitor's equipment proves to be superior than it. Similarly, Gogo has a right to bid to upgrade equipment to match the competitor, according to CRAIN's Chicago Business.
Gogo in its regulatory filing said: "We plan to submit a competing proposal to install our latest satellite technology-2Ku-on this fleet," Gogo said in the regulatory filing. But, the investors are concerned that Gogo's competitor may be offering a better service to American Airlines.
Shares of the in-flight internet service provider tumbled after the statement from American Airlines Group giving a declaratory judgment against Gogo. Gogo stock tanked 33 percent on the day of statement. American Airlines said Gogo's competitor ViaSat made a bid making it a better deal to upgrade the internet service in 200 older planes, according to ZACKS.
Gogo further said: "American notified Gogo that it considers a competitor's connectivity service to offer a material improvement over our early-generation air-to-ground service with respect to a portion of American's fleet representing approximately 200 aircraft."
Gogo Inc is a global leader in providing broadband connectivity solutions and wireless entertainment to the aviation industry. In 2015, Gogo added 1,100 commercial and business aircraft to its broadband connectivity. Michael Small, President and CEO, Gogo Inc, is committed on investments to enhance operational capabilities, as reported by Gogo Inc.
In overall, Gogo is offering its broadband connectivity and Wi-fi services to over 11,000 aircraft including commercial and business aviation across the world. American Airlines has filed a civil complaint in State Court in Tarrant County, Texas. American Airline has asked the court for issuing a declaration under the contract that the present conditions satisfy the norms to provide notice. The Dallas-based American Airlines is planning to switch over to ViaSat services.
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