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American, Travelport File Lawsuits

November 8, 2010 By: George Dooley

In a case that will be closely watched by travel agents, American Airlines (AA) confirmed that it has taken legal action to defend itself against action by Travelport who sued to block AA from terminating Orbitz Worldwide’s ability to sell AA’s tickets. Travelport filed in an Illinois court and American in a Texas court on Friday.

“These claims over the contract action we had taken are groundless in our view, and we are seeking a declaratory judgment to protect our existing rights,” Mary Sanderson’s AA’s director corporate communications and advertising told Travel Agent. “Given that this litigation remains pending, we don’t intend to comment further at this time.”

Travelport declined comment, but referred queries to its filing. Travelport, whose affiliate owns 48 percent of Orbitz’s stock, said they would suffer substantial harm if American stops providing fare data to Orbitz.

The termination - threatened for December 1 -would be a breach of American’s 2006 contract with Travelport, the company said in its complaint. In dollars, Travelport estimated a $50 million loss in share value with more anticipated.

“This case is about AA putting its corporate knee on the neck of one of Travelport’s largest customers, Orbitz Worldwide,” Travelport said, alleging that the move violates AA’s contract with Travelport.

Travelport argued that, specifically, AA is “coercing” Orbitz into changing it business model to one that AA believes will more “thoroughly stuff AA’s pockets.” Travelport said AA’s proposed termination would be an “egregious beach” of AA’s contract.

Travelport also alleged that the “distribution model AA wants to impose is inefficient, costly, anti-competitive and anti-consumer.”

Travelport seeks a court order that would stop AA from acting until a judge hears the case. The company wants “full and complete” access to AA’s flights and fares.

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