Bloomberg News

Sabre Seeks to Raise Antitrust Claims Against American

June 01, 2011

(Updates share prices in 10th paragraph.)

June 1 (Bloomberg) -- Sabre Holdings Corp. escalated its fight with American Airlines over the distribution of fares and schedules to travel agents by asking a court for permission to sue the carrier for antitrust violations.

Sabre today filed a motion to intervene as a defendant and file a counterclaim in a lawsuit brought by AMR Corp.’s American in federal court in Fort Worth, Texas. American called the claims “meritless” and added Sabre as a defendant in the case.

American acted illegally in trying to force agents to use its proprietary technology to access all of the airline’s data, Sabre said today in a statement. In doing so, American is trying to “eliminate” global distribution systems like Sabre, the Southlake, Texas-based company said.

Sabre, the biggest U.S. global distribution system, and Fort Worth-based American have been disputing the control and dissemination of data consumers use to book flights through travel agents. The U.S. Justice Department said May 20 that it was investigating possible antitrust violations by Sabre and other GDS companies.

American, through a variety of means, “seeks to destroy the ability of travel agents, corporate travel purchasers, and the traveling public to make apple-to-apple price comparisons,” Sabre said in the proposed complaint.

Orbitz Worldwide

Sabre asked to intervene in a suit American filed in April against Travelport Ltd., a GDS, and Orbitz Worldwide Inc., an online travel agency that is 48 percent owned by Travelport. Closely held Sabre was spun off by American in 2000 and acquired by units of buyout firms TPG Capital and Silver Lake in 2007.

Today marked the expiration of an agreement between American and Sabre to suspend legal action while they tried to negotiate an agreement. Chris Kroeger, Sabre Travel Network senior vice president, said in the statement that the company would “continue to pursue through negotiations a distribution agreement with AA.”

American today added Sabre as a defendant in the case in an amended complaint.

“American’s decision to include Sabre to the antitrust lawsuit comes after American attempted for several months to resolve disputes over distribution of the airline’s fares and schedules,” the airline said in its statement. In a separate e- mailed statement, American called Sabre’s claims “a spurious attempt to distract the public and its subscribers from the serious implications of its own anticompetitive behavior.”

Shares Decline

AMR fell 18 cents, or 2.9 percent, to $6.09 at 4 p.m. in New York Stock Exchange composite trading. The shares have declined 22 percent this year. The 11-carrier Bloomberg U.S. Airlines Index dropped 3.1 percent today.

The cost to protect Sabre’s debt from default for five years jumped to the highest since September 2009. Credit-default swaps on the company’s debt added 7.6 basis points to 774.1 basis points, according to data provider CMA.

Credit-default swaps, which typically fall as investor confidence improves and rise as it deteriorates, pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt.

The case is American Airlines Inc. v. Travelport Ltd., 11- cv-244, U.S. District Court, Northern District of Texas (Fort Worth).

--Editors: Andrew Dunn, Fred Strasser

To contact the reporters on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net; Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net.

To contact the editors responsible for this story: Ed Dufner at edufner@bloomberg.net; Michael Hytha at mhytha@bloomberg.net.


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