Unless you’ve been hiding under a rock this week, you’ve at least heard about the violent removal of a passenger from a United Airlines flight. Most likely, you’ve seen the video of a doctor being shoved head first into an armrest, knocked unconscious, and dragged off the plane. You may have also seen the same man, who reboarded the plane, then be taken back off while muttering “just kill me.” That was all followed by United’s CEO blundering the resolution of the disastrous incident. And as a result, United Airlines almost instantly lost $800 million. Social media is seething, and United will lose customers. While doomsayers are saying the airline is done, everyone seems to be forgetting one thing …
UNITED AIRLINES, REGARDLESS OF FAULT, TOO BIG TO FAIL?
United Airlines has seen better days. Just recently, the airline was the subject of scorn by women for not allowing a girl onto a flight for wearing leggings. Now this. Their CEO, Oscar Muñoz, has come under heavy fire for his non-apology letter to United employees, in which he thanked the company’s team for always going above and beyond. And while he said he regretted the “incident” in which a passenger had to be “displaced”, there was no apology — until after his company’s stock dropped almost a billion dollars. After that, Muñoz was all about apologizing. A CEO is the face of a company, and Muñoz did a particularly terrible job of responding to a wildly viral video. He had an opportunity to control the situation, and instead just made it worse.
Because the video shows a Chinese passenger being treated so violently, there’s been considerable outrage in China. And while that may not seem like a big deal, it matters. United is the largest U.S. carrier to China, and is the largest airline in the world in regards to number of destinations served. Facing friction from China would be a big problem for the airline, which could be a key reason for Muñoz’s sudden about-face.
And while the entire situation could’ve been prevented with a little bit of diplomacy on the part of United, it was not United employees who removed the passengers, but Chicago airport police officers. United’s flight crew most likely regretted calling the police once they saw the brutality that ensued, but you can’t unring that bell. However, regardless of who did the physical harm, there’s no actual danger to United.
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Simply put, the airline is too big to fail. And that’s something no one is talking about. It doesn’t matter how angry people are, or how many people *swear* they’ll never fly United again (they will), the airline employs too many people, and as a result, is protected by the government. If you don’t believe that, just look back to 2003 when the airline received a $1.6 billion bailout from the government. But even without that bailout, United is fine. The stock has tripled the last 3 years, and traders can expect for United Continental Holdings, Inc. (UAL) to continue to rise UP. And if it drops a little more, that just makes for a cheaper entry point.