‘Tone-deaf’ response puts airline stock in a dive

April 12, 2017

The CEO of United Airlines issued a more forceful apology yesterday, a day after defending the airline’s actions when a Kentucky doctor who refused to give up his seat for a crew member was bloodied and violently removed from a plane in Chicago.

CEO Oscar Munoz vowed results of an internal review of the incident by April 30, as shares of United Continental Holdings Inc. fell as much as 4.4 percent before recovering to close at $70.71, down 1.13 percent. The company saw about $255 million erased from its market capitalization.

“I continue to be disturbed by what happened on this flight, and I deeply apologize to the customer forcibly removed and to all the customers aboard,” Munoz said. “No one should ever be mistreated this way. It’s never too late to do the right thing. I have committed ... that we are going to fix what’s broken so this never happens again.”

Munoz said the airline’s review will look at crew movement, policies for incentivizing passengers to voluntarily give up their seats, how it handles oversold situations, and its partnerships with airport authorities and local law enforcement.

One of three Chicago Department of Aviation police officers who forcibly removed the passenger from the plane at O’Hare International Airport was put on leave Monday, with the department saying it “obviously” did not condone the actions of the officer.

After Flight 3411 to Louisville, Ky., was fully boarded, four crew members approached United gate attendants and said they had to board the flight to ensure their arrival in time to operate another flight from Louisville, according to United’s summary of events provided to employees. The airline then sought four passengers to voluntarily give up their seats for up to $1,000, which the ejected passenger refused before being told he’d have to leave the plane anyway.

In a terse statement Monday, Munoz — named “Communicator of the Year” in March by PRWeek, a public relations industry publication — apologized for having to “re-accommodate” the passengers.

“It went from what seemed like being a really bad PR misstep to being a step on a landmine,” said David Gerzof Richard, an Emerson College marketing professor and CEO of BigFish Communications.

United’s corporate communications team failed the airline, said Henry Harteveldt, an analyst at Atmosphere Research Group. “They came off as tone-deaf, heartless and detached,” he said. “I don’t think Oscar Munoz was served very well.”

But Harteveldt expects the ramifications for United to be short-term, without a meaningful impact on revenue or profit, despite calls for a boycott.