Settlement calls for American, Sabre to negotiate for new PSS
AA also will receive ‘substantial’ payments and credits from Sabre
Sabre’s settlement agreement with American Airlines contains “an agreed upon period during which American will only negotiate with Sabre regarding a new passenger processing system,” according to documents filed in the carrier’s bankruptcy court.
“The parties are currently negotiating American’s use of the SabreSonic Customer Sales & Service System,” the documents state. “American has agreed that commencing from the execution date and continuing through an agreed upon date (the “Exclusivity Period”), American will not solicit, discuss or negotiate with any party other than Sabre about any passenger services system that has functionality that is within the scope of the CSS. The parties agree that during the Exclusivity Period they will in good faith negotiate a definitive agreement with respect to CSS.”
That will likely disappoint Amadeus, which had hoped to have another run at selling its Altéa system to American.
American previously selected Hewlett-Packard to develop a new passenger services system, but after two years of work they could not agree on key issues of the project. They dissolved their contract in June.
The American-Sabre settlement, reached on Oct. 31, brings an end to two antitrust lawsuits filed by American against Sabre in the state court in Tarrant County, Texas, and in the U.S. District Court, Northern District of Texas. Sabre filed counterclaims in both courts.
Travelport and Orbitz Worldwide remain defendants in the federal lawsuit, which has been stayed until Dec. 21 to allow the parties to meet with a mediator.
The settlement agreement, which requires the approval of American’s bankruptcy court, also calls for American to receive “substantial payments and credits from Sabre.” The amounts were redacted, as was the length of the negotiating exclusivity period.
Within five business days of the effective date of the settlement agreement, “Sabre will make a cash payment to American,” the court filing states. “On or before the first anniversary of the effective date, Sabre will make an additional cash payment to American.” In addition to the cash payments, Sabre will provide a credit to American “to be applied against amounts owed by American to Sabre” under various Sabre Airline Solutions product agreements.
The agreement also includes a “Content Amendment” that extends the terms of the Sabre Participating Carrier Agreement and terminates the prior content amendment. It requires Sabre to display American’s content in an unbiased manner and “sets forth the parties’ understanding as to data ownership and security. American may continue to pursue its Direct Connect initiative.”
The Direct Connect issue set off the chain of events that led to the lawsuits.
Meanwhile, Sabre continues to provide reservations, ticketing and departure control services to American, and the two companies extended their existing agreement by two years, to June 30, 2016. If they don’t reach an agreement for SabreSonic, “American would be entitled to up to an additional 18 months of transition assistance, which would include continued provision of the development and maintenance services for the existing PSS to the extent requested by American.”
As part of the settlement, American told the Justice Department’s Antitrust Division that it has resolved its issues with Sabre that led it to complain about Sabre’s “conduct and practices,” and it withdrew its complaint.
Still pending is another antitrust lawsuit that US Airways filed against Sabre in a New York federal court, which has been stayed until January. The language of the lawsuit was similar to that used by American in its court cases.
Read about Sabre’s new defense in US Airways’ antitrust lawsuit in the Jan. 7 issue of TTU.
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