United Airlines briefly sheds $1B; CEO says 'we will fix this'

"No one should ever be mistreated this way," United CEO Oscar Munoz said in a new statement Tuesday.
By Doug G. Ware and Andrew V. Pestano  |  April 11, 2017 at 4:10 PM
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April 11 (UPI) -- United Airlines was hit hard on Wall Street Tuesday over a video showing armed police dragging a bloodied passenger off a flight from Chicago to Louisville to make room for a flight crew.

Shares of United Continental Holdings were up slightly at the end of business Monday, but fell by more than 2 percent in early trading Tuesday -- or roughly $1 billion in market value -- as the carrier grappled with fallout from the growing controversy.

Several passengers aboard the Sunday flight recorded the incident with their smartphones and posted the videos online, drawing widespread media attention Monday. In an email to employees, CEO Oscar Munoz said flight crew used proper protocols to address a "disruptive and belligerent" passenger.

By 2 p.m. Tuesday, shares of Chicago-based United (NYSE: UAL) were down more than 2.5 percent and trading below $70 per share. At 10:25 a.m., United stock was trading at $68.42, after closing Monday at more than $71. The stock rebounded to $70.71 (-1.1 percent) by Tuesday's closing bell.

After regular trading ended, Munoz issued another, more apologetic statement about the incident.

"The truly horrific event that occurred on this flight has elicited many responses from all of us: outrage, anger, disappointment. I share all of those sentiments, and one above all: my deepest apologies for what happened," Munoz said. "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. No one should ever be mistreated this way."

The CEO said the airline will conduct "a thorough review of crew movement, our policies for incentivizing volunteers in these situations, how we handle oversold situations and an examination of how we partner with airport authorities and local law enforcement."

Munoz said United will announce the results of the efforts by the end of the month.

"I want you to know that we take full responsibility and we will work to make it right. It's never too late to do the right thing."

Additionally, United may have to face much bigger problems than falling stock.

It has been reported that the passenger, Louisville area resident David Dao, is a Chinese or Vietnamese national and a Kentucky physician -- a prospect that may cause substantial damage to United's standing in one of the world's most lucrative markets: Asia.

"This is inherent arrogance," Chinese author Song Hongbing said. "I don't think a 69-year-old white doctor would be treated like this."

"Why was it an Asian who got beaten? This is purely racial discrimination," Chinese venture capitalist Wang Guanxiong said. "Boycott United Airlines."

Munoz, who won a public relations award just last month, said that when flight crew asked Dao to relinquish his seat, he "raised his voice and refused to comply." The CEO added that each time flight crew asked him to leave the seat, he "refused and became more and more disruptive and belligerent" -- leaving the crew with "no choice" but to call in police.

"This situation was unfortunately compounded when one of the passengers we politely asked to deplane refused and it became necessary to contact Chicago Aviation Security Officers to help," Munoz continued. "While I deeply regret this situation arose, I also emphatically stand behind all of you, and I want to commend you for continuing to go above and beyond to ensure we fly right."

United's response didn't appease critics.

Los Angeles Times business columnist Michael Hiltzik said Munoz's handling of the incident is straight from "the playbook of how to dig oneself into an ever deeper hole."

"Whether United had 'no choice' but to forcibly eject the passenger also is questionable, as presumably the airline could have transported its crewmembers to Louisville either by road (a five-hour drive) or by chartering another aircraft," he wrote. "Plainly this was a botched job in countless ways and at multiple levels."

Additionally, footage of the ordeal could contradict Munoz's claim that Dao was being either "disruptive" or "belligerent."

In another statement Tuesday afternoon, Munoz said, "I'm sorry. We will fix this."

In the videos, three Chicago Aviation Security officers are seen talking to Dao, presumably telling him he has to deplane. Before long, the man is literally yanked out of his seat and dragged along the center aisle, his mouth bloodied, as shocked passengers decry his manhandling. At no time is it unequivocally clear in the videos, though, that Dao is behaving in a manner that warrants a violent expulsion.

Later footage captured by passengers shows Dao on the plane after he was removed, saying he has to get home. Another clip shows him standing near an entryway with blood streaking his mouth and chin.

United has since taken a severe beating in the media for so forcefully removing a paid passenger for refusing to be "voluntarily bumped" to make room for a flight crew of four, who needed to get to Louisville for a "downline connection."

"The bigger problem here is with the airline, which is so used to treating its customers so badly that it couldn't even bring itself to give a real apology to a customer who left the plane bloodied and battered," Louisville Courier-Journal columnist Joseph Gerth wrote.

Munoz, though, says the officers followed policy to the letter.

"Our employees followed established procedures for dealing with situations like this," he wrote.

However, Chicago aviation officials placed one of the officers on leave, saying his behavior "was not in accordance with our standard operating procedure."

"The actions of the aviation security officer are obviously not condoned by the Department," the Chicago Department of Aviation, which provides security at O'Hare and Midway airports, said in a statement.

United Airlines spokesman Charlie Hobart said the airline sought volunteers to exit the sold-out flight for compensation, but none volunteered. Then, according to protocol, the carrier chose four passengers to be bumped. All except Dao left without incident.

"We had asked several times, politely," Hobart said.

Munoz said the company continues to review the incident and will reach out to Dao directly. The U.S. Department of Transportation is reviewing the ordeal to determine if United properly followed procedure.

The airline's efforts, though, continue to be widely criticized.

"This could be me or you next time. Shame on United who broke customer trust and instigated this. Shame on the airport cops. Cowardly assault," filmmaker Ava DuVernay said in a statement.

ABC late-night host Jimmy Kimmel took aim at United with a parody commercial for the airline, saying, "Give us a problem, and we'll drag your [expletive] off the plane."

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