I was quite frustrated by this - not only by the problem itself but the uncertainty till when I need to wait to call it "It won't - try again." - at which point I will quit the Application Loader app, re-package my ipa file and try again. Probably with a port change to net.properties file. But it didn't always work the same way as it did last time. So I am writing it here, mostly for the sake of myself!
I was about to just call another day thrown when this worked, almost like a charm:
1) Open file. Applications > Xcode > Contents > Applications > Application Loader > Contents > MacOS > itms > java > lib - net.properties
2) Change the line:
# https.proxyPort=<whatever>
to
https.proxyPort=80
Make sure that you do not uncomment # https.proxyHost=
- just leave it as shown (commented).
3) Start Application Loader. Follow usual steps and start uploading your ipa using Send command.
4) If it seems to be getting past "“Authenticating with the iTunes Store” in reasonable time (say 10 minutes at which time my patience ran out) - you are lucky. Go sleep or hang out.
5) Launch Xcode Organizer. Select your archive and click Distribute button. It will show slanting progress lines for couple of minutes. If it doesn't stop, kill Xcode and retry.
6) After about 2 slant minutes, the blue solid progress will appear, and there flies your "Flappy Bird"...! (mine was neither Flappy nor Bird)
(Keep the Application Loader alive, just for the sake of having it around, I don't know if it's useful anymore, but I am just superstitious)
- Workarounds apart, this is something Apple must fix before releasing iOS 8 or iPhone 6. Seriously. If they don't, I am not wasting my $100 next year.
(Or - will this bug be still around to prevent those "Flappy" clones from flooding the app store, forever?)