Credit: Shutterstock photoWe live in a digital age where many newsworthy events are captured on cell phone video. That enables us to form our own opinions regarding what happened. We should, therefore, be less susceptible to spin, whether that comes from the media outlet that reports that news or from somebody involved in it.
You would think that that simple truth would discourage people involved in any “scandalous” news that comes from video footage from saying stupid things, especially in the permanent form of an e-mail, but it doesn’t seem to have stopped United Airlines (UAL) CEO Oscar Munoz.
In case you missed it, the airline was caught up in controversy when video footage emerged of airport security personnel forcibly removing a passenger from the seat that he had been ordered to give up on an overbooked United flight in order to make way for airline employees. The man’s face hit an armrest as he was pulled from his seat and then he was dragged feet first down the aisle of the plane with blood coming from his mouth.
The official, public reaction from Munoz was what you might expect. He said in a tweet that the company apologized to this and other passengers kicked off of the flight and that the man involved would be contacted to “resolve this situation”. In an e-mail to employees later the same day, however, Munoz appeared to have basically said that the guy deserved it, calling him “disruptive and belligerent” and noting that he raised his voice.
That may well have been the case, and Munoz’ desire to defend his employees is understandable, but that e-mail demonstrates a very real issue for investors when it comes to airlines. Their stocks are great for trading but have inherent risk as long term investments.
There is in the public perception an arrogance to the major U.S. airlines. They have worked hard to dispel that image over the last few years but an incident such as this shows that the culture of arrogance is alive and well, and Munoz’ e-mail gives an idea as to why.
When a passenger is told that they have to give up the seat that they have paid for and booked, raising their voice in complaint is a quite natural reaction and certainly doesn’t merit being manhandled and physically injured.
Now, there may well be more to the story than is apparent, and that the public should believe Munoz’ version of events rather than their own lying eyes, but in this case reality is less important than perception, and the perception is that United was at fault.
One would expect a CEO in a situation like this to set an example, making it clear to employees as well as the public that, regardless of any sense of justification they may feel, the airline accepts some responsibility and is genuinely contrite. To instead send an internal communication that suggests that dragging a bloodied passenger through the aisle of a plane is a suitable reaction is to encourage the kind of arrogance that conventional wisdom worries about in carriers like United.
That attitude has in the past extended to the financial affairs of airlines too, with bankruptcy being favored as a way to ensure that stockholders bear the costs of failure.
Let’s not get carried away here; this incident will likely do little, if any, long term harm to United Airlines or its stock. UAL is being marked lower this morning, presumably in reaction to the coverage, but the uproar will fade.
That said, investing long term in a company that attempts to justify treating customers in that way is not a smart move. It is why major airline stocks make good trading instruments but it is a sector where taking profits when they come along is rarely a bad idea.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
