Bloomberg News

American Airlines Told by Judge to Let Orbitz Use Its Data

June 02, 2011

June 2 (Bloomberg) -- American Airlines was ordered by a judge to let Orbitz Worldwide Inc. resume ticket sales, the same day Sabre Holdings Inc. asked a federal court in Texas for permission to sue the carrier over access to flight data.

Illinois Circuit Court Judge Lee Preston in Chicago yesterday ordered AMR Corp.’s American to reinstate Orbitz.com’s and Orbitz for Business’s ability to ticket its flights. Preston overturned a decision denying a request by Travelport LP for a preliminary injunction. Travelport owns about 48 percent of Chicago-based Orbitz.

“The court agreed with Travelport that an injunction should have been granted against AA in December which would have prevented AA from terminating its contracts with Orbitz,” Travelport said in an e-mailed statement.

Orbitz jumped 91 cents, or 42 percent, to $3.13 at 6:03 p.m. yesterday after regular New York Stock Exchange composite trading. The shares declined 9 cents in regular trading yesterday. AMR fell 18 cents to $6.09 yesterday.

On Dec. 21, after defeating Travelport’s bid for an injunction, American stopped displaying data and selling tickets through Orbitz. American has developed a system of its own, Direct Connect, which provides fare pricing and options directly to larger online travel agencies. The carrier also is trying to use its system to provide more products to customers and boost revenue.

‘Exact Opposite’

“This is the exact opposite conclusion than that of the judge who heard the evidence,” Fort Worth, Texas-based American Airlines said in a statement. “We are evaluating our options, but in the meantime, we will, of course, comply with the judge’s order.”

Travelport, which compiles flight schedule and fare data from airlines and distributes it to travel agents, is owned by New York-based Blackstone Group LP.

Sabre Holdings Corp. yesterday escalated its fight with American over the distribution of flight fares and schedules to travel agents by asking a court for permission to sue the carrier for antitrust violations.

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

Expiration Date

Yesterday 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 acted illegally in trying to force agents to use its proprietary technology to access all of the airline’s data, Sabre said 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 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 global distribution system operators.

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.

Asks to Intervene

Sabre asked to intervene in a suit American filed in April against Travelport and Orbitz. Closely held Sabre was spun off by American in 2000 and acquired by units of buyout firms TPG Capital and Silver Lake in 2007.

“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.”

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 Illinois case is Travelport v. American Airlines, 10CH48028, Circuit Court of Cook County, Chancery Division (Chicago). The Texas case is American Airlines Inc. v. Travelport Ltd., 11-cv-244, U.S. District Court, Northern District of Texas (Fort Worth).

--With assistance from Mary Jane Credeur in Atlanta and Margaret Cronin Fisk in Southfield, Michigan. Editors: Andrew Dunn, Glenn Holdcraft

To contact the reporter on this story: Thom Weidlich in Brooklyn, New York, federal court at tweidlich@bloomberg.net; Mary Schlangenstein in Dallas at maryc.s@bloomberg.net.

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


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