United Continental Holdings (ticker: UAL) shares shed more than 4 percent in early Tuesday trading after a video of a passenger being forcibly removed from a plane went viral around the globe on Monday. The incident occurred in Chicago on Sunday night when United was unable to find volunteers to give up seats on an overbooked flight to Louisville, Kentucky, so airline employees could travel.
Multiple cell phone videos of a passenger being forced out of his seat and dragged off an airplane by security officers hit the internet on Monday, but United’s stock didn’t react to the negative publicity until #UnitedAirlinesforcespassengeroffplane became the top trending topic on Weibo Tuesday. Weibo is China’s version of Twitter (TWTR), and the United Airlines passenger appears to be of Asian ethnicity.
United CEO Oscar Munoz issued an apology to the passenger on Monday.
“This is an upsetting event to all of us here at United. I apologize for having to re-accommodate these customers,” Munoz said in a statement.
Unfortunately for UAL stock owners, the apology may have done more harm than good.
“When management stepped out – and in the most offensive way possible – you started to see negative [social media] mentions surge,” says LikeFolio’s Andy Swan. Swan says United “invited some really negative stuff on themselves,” and sees the incident as “an enormous deal for shareholders.”
In terms of financial fallout, a potential boycott of United flights may be the only cause for concern for United investors. Much of the social media chatter about the event references potential lawsuits against the company, but Seattle attorney Dan Lear says United is probably in the clear from a legal standpoint. Lear says airlines have “broad discretion” to handle passengers they deem to be “a security risk” to the crew and other passengers.
United investors are hoping…
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