Carrier Says Its Contract Allows Airline To Terminate Or Renegotiate The Deal

American Airlines is mulling whether to drop Gogo in-flight Internet service from its fleet, and the prospect has caused Gogo's stock to drop sharply.

Business Insider reports that American has notified Gogo that it has received a competitive bid from another provider. The Fort Worth Star Telegram reports that American's contract with Gogo allows the airline to terminate the contract if it gets a better deal from another provider. American has reportedly asked a judge to uphold that provision.

But Gogo may not be gone from American just yet. The airline told Business Insider that Gogo may submit a new proposal to stay on board its airliners, and at that time the airline would "evaluate all of our options."

Gogo says it does plane to give American a proposal for installing new 2Ku satellite technology on American's fleet, but that would only affect about 200 of the 1,000 mainline and regional aircraft owned by AA.

Gogo said that American is A valued customer" and that it is looking forward to "resolving the disagreement regarding the contract interpretation that led to this declaratory judgement action."

America said the competing bid is from ViaSat.

FMI: www.american.com, www.gogoair.com