United Continental’s Latest Controversy Costs It $550M

United Continental Holdings Inc. (NYSE:UAL) continues to struggle with the fallout over its most recent passenger controversy. On Sunday, a video quickly spread on social media of a United Airlines passenger being forcibly dragged off a plane after the airline randomly bumped him from the flight, angering people across the globe. Shares in the airline fell 2.4 percent Tuesday morning, wiping $550 million off the airline’s market value.

The incident occurred on a full United Express flight from Chicago’s O’Hare International Airport to Louisville, Ky. after the passengers had boarded the aircraft. The United flight, operated by Republic Airways, reportedly asked for four volunteers to leave the plane due to overbooking. When enough volunteers could not be found, airline representatives told the passengers that the plane would not leave until the seats were available and that the computer would select passengers at random to be bumped.

One of the passengers randomly selected, Dr. David Dao, refused to get off of the plane. He stated that he was a doctor and had to return home to treat patients on Monday. The flight crew called law enforcement to forcibly remove him from the plane. As officers drag him down the aisle, you can hear distressed travelers yelling at them to stop.

There was widespread criticism of United after the video showing Dao being dragged off the plane by law enforcement went viral. Much of the outrage was because the man wasn’t being ejected for misbehavior or a security threat, but because the airline needed room for its own employees to get to another flight.

The graphic videos of Dao, who appears to be of Asian descent, covered in blood triggered immense outrage on social media on China. The top trending topic on a popular Chinese microblog Tuesday was #UnitedAirlinesforcespassengeroffplane, with more than 270 million views. The incident was also the focus of a government editorial in China. The doctor’s identification as ethnic Chinese has not be confirmed

United CEO Oscar Munoz issued a statement apologizing for having to “re-accommodate” customers after a two-hour delay. However, in an email to employees, he described the customer as “disruptive and belligerent.” That letter to employees almost restarted the crisis, as mentions of United skyrocketed on social media again.

Many investors appear to think the carrier’s business could suffer over the incident and are questioning the ability of management to handle crisis scenarios. United shares had been down by as much as 6 percent in premarket trading. The stock is on pace to be down around 1.3 percent for the week.


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