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AMR’s American Airlines Settles Litigation With Sabre

AMR Corp. (AAMRQ)’s American Airlines settled litigation with Sabre Holdings Inc., the flight data and reservation business that American spun off in 2000 and later accused of trying to crush competition from its former parent.

The companies renewed their current distribution agreement for multiple years, according to a jointly issued statement today. The airline will also receive an unspecified sum of money from Sabre.

The settlement comes one week into the Fort Worth, Texas, state court jury trial of a lawsuit in which American claimed Sabre units doubled fees for displaying the airline’s data on its system, suppressed that data and organized a boycott to punish the carrier for trying to develop a new data and reservation system. The agreement also resolves federal claims between the companies, according to Nancy St. Pierre, a Sabre spokeswoman.

“Peace was obligatory,” said Richard Clarke, a founding director of the U.K.-based industry consultant Travel Technology Research. Citing the companies’ interdependency, in a phone interview he said, “the money spent on the trial may not have been worthwhile for either party.”

Created by American in 1960 and spun off in 2000, Southlake, Texas-based Sabre operates the world’s most extensive flight data and reservations network, linking more than 350,000 travel agents to more than 400 airlines through its global distribution system, or GDS, according to its website. It also runs the online bookings site Travelocity.

Travel Agents

Travel agent sales of American plane tickets through Sabre’s system comprised the carrier’s largest non-direct source of bookings, accounting for more than $7.7 billion in revenue in 2010, according to a January 2012 court filing by the airline.

“This is a story of how a very powerful company, in a secret way, set out to crush new competition,” Paul Yetter, an attorney for the airline, told jurors in his Oct. 24 opening statement. He said his client sustained $993 million in damages.

Closely held Sabre countersued, accusing the carrier of antitrust violations.

“This is a commercial contract dispute,” a Sabre lawyer, Chris Lind, said in his own opening comments. “We’ll be asking you to reject American’s claims.”

Clarke said the dispute may have been driven in part by American’s frustration with being able to lead the technology wing of the civil aviation industry as it once did when Sabre was an in-house unit.

New Systems

He also cited the rise of global distribution systems such as Amadeus, which he said was created by a group of European carriers including Germany’s Deutsche Lufthansa AG (LHA), Spain’s Iberia Lineas Aereas de Espana SA and Air France. (AF)

Airlines will continue to seek more efficient means of data distribution and global distribution systems will pursue better revenues, Clarke said.

“The win-win opportunity is for the GDSs to build better software and services,” Clarke said.

American and Fort Worth-based AMR filed for bankruptcy last year. The settlement requires approval from the judge overseeing that case, according to today’s statement.

The case is American Airlines Inc. v. Sabre Inc., 067- 249214-10, Tarrant County, Texas, District Court for the 67th Judicial District.

To contact the reporters on this story: David McLaughlin in New York at dmclaughlin9@bloomberg.net; Andrew Harris in Chicago at aharris16@bloomberg.net

To contact the editors responsible for this story: John Pickering at jpickering@bloomberg.net; Michael Hytha at mhytha@bloomberg.net

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