United passenger was 'immature,' former Continental CEO Gordon Bethune says
When one fiasco settles down, another begins for United Airlines — or so it seems.
On Sunday evening, a video surfaced on social media showing a man being dragged from a United plane because his trip was overbooked. This comes just weeks after United stopped two female teenagers from boarding its plane because they were wearing "form-fitting" leggings. However, they were traveling as "representatives" of the company, a United spokesperson later argued.
"Denied boarding is usually handled with a whole lot more maturity," former United Airlines parent United Continental Holdings' Chief Executive Gordon Bethune told CNBC in an interview Monday, referring to the forced removal of the male passenger.
"[United] tries to do a professional job, but not everybody on the plane is professional," thereby creating a "scene" on Sunday evening that carried over onto social media, Bethune added. "This immature reaction disturbs us all."
The former Continental CEO, who now serves on the boards of Honeywell, Sprint and Prudential Financial, said he thinks United's current chief executive, Oscar Munoz, should issue an apology for Sunday's incident and for the passengers who had to endure it. "I'm sure there will be reconciliation ... some effort to show they care about passengers," Bethune said.
"I'm sure there will be a lot of discussion [at United] about how to handle this in the future."
Shortly after Bethune's interview on CNBC, United CEO Munoz issued a statement, saying: "This is an upsetting event to all of us here at United. I apologize for having to re-accommodate these customers. Our team is moving with a sense of urgency to work with the authorities and conduct our own detailed review of what happened."
But for many airlines, incidents like Sunday's come as no surprise, one social media and brand expert said.
"The thing about airlines is they have a low happiness level to begin with," Andy Swan, the founder of social media monitor LikeFolio, told CNBC in an interview on Monday. Swan said he's not sure United ever "bounces back" from public relations nightmares like this — because it's really "nothing new."
This is likely the reason why United Continental's stock hardly reacted negatively to Sunday's debacle, with shares actually up about 1 percent by Monday afternoon, Swan added.
As he monitored social media sites like Facebook and Twitter to see how the public was responding to the video of a passenger being dragged, Swan said: "You see very negative reactions, lots of negative tweets about the brand. But the thing to remember is on airlines' [stock] it almost never matters."
Unless it's a real safety issue that blows up — like when the roof tore off a Southwest Airlines plane in 2011 — most companies don't see changes in consumer purchasing behavior based on these types of events, Swan told CNBC. And that's what Wall Street is concerned about — ticket sales and seats filled.
At the end of the day, bad brand image or not, many people are going to continue to buy their airline tickets based on metrics like the lowest price or the best arrival time, social media expert Swan said. It's not like Chipotle, for example, which has to fight to win back customers after its E. coli fiasco.
"Tomorrow we'll be talking about something else," Swan laughed.
‘Re-accommodate’ is United’s euphemism for forcibly dragging passenger off an airplane
When an airline sells more tickets for a flight than it has seats on the plane, it typically seeks volunteers willing to give up their seats in exchange for one on a later flight and a cash voucher of several hundred dollars. That’s called getting bumped. Many of us were, until Monday, unaware that being bumped is sometimes compulsory. And virtually none of us, thankfully, had suspected — till video footage of a United Airlines passenger apparently being dragged forcefully from his seat — how ugly those instances could turn.
The latest development of the story: a revelation that the company itself apparently places the entire spectrum of “bumping” experiences under a single anodyne rubric: re-accommodation.
That’s an excerpt from a United tweet featuring a statement attributed to the Chicago-based carrier’s UAL, +0.90% chief executive, Oscar Munoz.
That’s an excerpt from a United tweet featuring a statement attributed to the Chicago-based carrier’s UAL, +0.90% chief executive, Oscar Munoz.
The Sunday evening flight, United Flight 3411, was from Chicago’s O’Hare International Airport to Louisville International Airport.
United Airlines Caused Outrage by Ejecting a Passenger—And Its Stock Went Up
United Airlines made all the wrong kinds of headlines Monday after forcibly ejecting a customer from an overbooked flight. Photos and videos of the bloodied passenger being dragged off the plane by security quickly circulated via social media, and soon enough, the company had a PR disaster on its hands.
But you wouldn't have known that from looking at the stock market on Monday afternoon. Shares of United Continental Holdings closed up nearly 1% Monday, even as Twitter users threatened to boycott the company over its treatment of a customer. The rise wasn't part of an overall market bump: The S&P 500 was basically flat for the day.
So why did investors deem United Airlines to be what turned out to be $355 million more valuable, despite the negative news?
It's not entirely true that investors didn't care about the incident. United stock dipped as much as 2.5% in pre-market trading Monday, likely in reaction to video and news of the incident, which broke late Sunday. But some investors swooped in to buy on that dip, sending shares up in trading after the market opened. After all, many are expecting better financial results from United , especially given overall strength in travel and the wider economy. (The company will release first quarter 2017 earnings April 18.) Shares of the company have risen some 33% over the past year.
United released its March traffic figures Monday afternoon, reporting a 3% year-over-year increase in traffic for the month. That allowed United to give a more upbeat first quarter guidance of relatively flat unit revenue. But it also had trouble filling up all its seats, with its consolidated load factor falling 0.3 points to 81.3% in March compared to a year earlier.
There's evidence to suggest that PR snafus like this weekend's don't have a long-term impact on the airline's stock. An incident nearly two weeks earlier in which United Airlines asked two teenage girls to leave a flight for wearing leggings sparked a media fire storm, but had no effect on the company's share price.
While a boycott would be bad for the company, it's still too early to say whether one will materialize, and whether it would be effective if it did. Starbucks, for example, has weathered several boycott threats with no clear effect—most recently over a promise to hire some 10,000 refugees within five years.
Perhaps most important: After years of mergers and consolidation, customers don't have as many options as they used to for domestic air travel. United is one of the "Big Four" airlines that now control about 70% of the U.S. market, and for some travelers in some regions, the carrier is their best or even only option, no matter what controversies may erupt.
On Sunday evening, a video surfaced on social media showing a man being dragged from a United plane because his trip was overbooked. This comes just weeks after United stopped two female teenagers from boarding its plane because they were wearing "form-fitting" leggings. However, they were traveling as "representatives" of the company, a United spokesperson later argued.
"Denied boarding is usually handled with a whole lot more maturity," former United Airlines parent United Continental Holdings' Chief Executive Gordon Bethune told CNBC in an interview Monday, referring to the forced removal of the male passenger.
"[United] tries to do a professional job, but not everybody on the plane is professional," thereby creating a "scene" on Sunday evening that carried over onto social media, Bethune added. "This immature reaction disturbs us all."
The former Continental CEO, who now serves on the boards of Honeywell, Sprint and Prudential Financial, said he thinks United's current chief executive, Oscar Munoz, should issue an apology for Sunday's incident and for the passengers who had to endure it. "I'm sure there will be reconciliation ... some effort to show they care about passengers," Bethune said.
"I'm sure there will be a lot of discussion [at United] about how to handle this in the future."
Shortly after Bethune's interview on CNBC, United CEO Munoz issued a statement, saying: "This is an upsetting event to all of us here at United. I apologize for having to re-accommodate these customers. Our team is moving with a sense of urgency to work with the authorities and conduct our own detailed review of what happened."
But for many airlines, incidents like Sunday's come as no surprise, one social media and brand expert said.
"The thing about airlines is they have a low happiness level to begin with," Andy Swan, the founder of social media monitor LikeFolio, told CNBC in an interview on Monday. Swan said he's not sure United ever "bounces back" from public relations nightmares like this — because it's really "nothing new."
This is likely the reason why United Continental's stock hardly reacted negatively to Sunday's debacle, with shares actually up about 1 percent by Monday afternoon, Swan added.
As he monitored social media sites like Facebook and Twitter to see how the public was responding to the video of a passenger being dragged, Swan said: "You see very negative reactions, lots of negative tweets about the brand. But the thing to remember is on airlines' [stock] it almost never matters."
Unless it's a real safety issue that blows up — like when the roof tore off a Southwest Airlines plane in 2011 — most companies don't see changes in consumer purchasing behavior based on these types of events, Swan told CNBC. And that's what Wall Street is concerned about — ticket sales and seats filled.
At the end of the day, bad brand image or not, many people are going to continue to buy their airline tickets based on metrics like the lowest price or the best arrival time, social media expert Swan said. It's not like Chipotle, for example, which has to fight to win back customers after its E. coli fiasco.
"Tomorrow we'll be talking about something else," Swan laughed.
‘Re-accommodate’ is United’s euphemism for forcibly dragging passenger off an airplane
When an airline sells more tickets for a flight than it has seats on the plane, it typically seeks volunteers willing to give up their seats in exchange for one on a later flight and a cash voucher of several hundred dollars. That’s called getting bumped. Many of us were, until Monday, unaware that being bumped is sometimes compulsory. And virtually none of us, thankfully, had suspected — till video footage of a United Airlines passenger apparently being dragged forcefully from his seat — how ugly those instances could turn.
The latest development of the story: a revelation that the company itself apparently places the entire spectrum of “bumping” experiences under a single anodyne rubric: re-accommodation.
That’s an excerpt from a United tweet featuring a statement attributed to the Chicago-based carrier’s UAL, +0.90% chief executive, Oscar Munoz.
That’s an excerpt from a United tweet featuring a statement attributed to the Chicago-based carrier’s UAL, +0.90% chief executive, Oscar Munoz.
The Sunday evening flight, United Flight 3411, was from Chicago’s O’Hare International Airport to Louisville International Airport.
United Airlines Caused Outrage by Ejecting a Passenger—And Its Stock Went Up
United Airlines made all the wrong kinds of headlines Monday after forcibly ejecting a customer from an overbooked flight. Photos and videos of the bloodied passenger being dragged off the plane by security quickly circulated via social media, and soon enough, the company had a PR disaster on its hands.
But you wouldn't have known that from looking at the stock market on Monday afternoon. Shares of United Continental Holdings closed up nearly 1% Monday, even as Twitter users threatened to boycott the company over its treatment of a customer. The rise wasn't part of an overall market bump: The S&P 500 was basically flat for the day.
So why did investors deem United Airlines to be what turned out to be $355 million more valuable, despite the negative news?
It's not entirely true that investors didn't care about the incident. United stock dipped as much as 2.5% in pre-market trading Monday, likely in reaction to video and news of the incident, which broke late Sunday. But some investors swooped in to buy on that dip, sending shares up in trading after the market opened. After all, many are expecting better financial results from United , especially given overall strength in travel and the wider economy. (The company will release first quarter 2017 earnings April 18.) Shares of the company have risen some 33% over the past year.
United released its March traffic figures Monday afternoon, reporting a 3% year-over-year increase in traffic for the month. That allowed United to give a more upbeat first quarter guidance of relatively flat unit revenue. But it also had trouble filling up all its seats, with its consolidated load factor falling 0.3 points to 81.3% in March compared to a year earlier.
There's evidence to suggest that PR snafus like this weekend's don't have a long-term impact on the airline's stock. An incident nearly two weeks earlier in which United Airlines asked two teenage girls to leave a flight for wearing leggings sparked a media fire storm, but had no effect on the company's share price.
While a boycott would be bad for the company, it's still too early to say whether one will materialize, and whether it would be effective if it did. Starbucks, for example, has weathered several boycott threats with no clear effect—most recently over a promise to hire some 10,000 refugees within five years.
Perhaps most important: After years of mergers and consolidation, customers don't have as many options as they used to for domestic air travel. United is one of the "Big Four" airlines that now control about 70% of the U.S. market, and for some travelers in some regions, the carrier is their best or even only option, no matter what controversies may erupt.
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