American Airlines, Orbitz Ends Litigation Over Distribution Costs

American Airlines, Orbitz Ends Litigation Over Distribution Costs
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American Airlines and online travel agency Orbitz Worldwide, Inc. (NYSE:OWW) have announced on Monday to finally settle their long standing dispute over travel distribution costs and methods.

American Airlines, Orbitz Ends Litigation Over Distribution Costs

Both companies are still to reveal the details of the settlement agreement that has to be reviewed and approved by the U.S. bankruptcy court presiding over American parent AMR Corporation (NYSE:AAR) (PINK:AAMRQ)’s Chapter 11 case.

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American airlines filed a case against Orbitz Worldwide, Inc. (NYSE:OWW) in April 2011, alleging the online travel agency and airfare data provider Travelport, which owns a 48 percent share in Orbitz, that they deviously made American’s fares look higher to consumers than they really were.

Since October 2010, when the agency refused to use American’s new technology that allows consumers to price their trips based on other factors besides just fares  the airlines have not been listing its fares on the travel agency site. The carrier, which announced in February the merger with US Airways Group, Inc. (NYSE:LCC) to form the world’s largest air carrier, has been posting the fares on in June 2011.

Travelport and American, last month came to an agreement to settle their antitrust lawsuit, and they also agreed on a new global distribution agreement. The carrier also agreed on a litigation settlement with flight reservations company Sabre Holdings Corporation last year.

In February, the travel agency lost a chance to enforce what it claimed was an agreement to resolve the antitrust litigation with American while the carrier denied any such deal had been completed.

“While this court certainly encourages settlement agreements, it simply is disinclined to enforce anything short of a final, signed agreement,” U.S. District Judge Terry R. Means said in a Feb. 12 ruling.

The agreement at that time was described by the Orbitz Worldwide, Inc. (NYSE:OWW)’s lawyer as a no payment to either party and mutual releases from liability. The lawyer also told that the agreement included a clause that Orbitz will make available information to American, which it could use against other defendants. In exchange of information, the airline would drop the suit against Orbitz.

In midday trading session, shares of Orbitz fell 18 cents, or 3.2 percent, to $5.53 while over-the-counter shares of AMR lost 8 cents, or 2 percent, to $4.07.

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Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at
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