It’s a bad time to be United Airlines ($UAL) right now. Just a few weeks ago, the company ejected two teenage girls from a plane for wearing leggings. This incident was met with accusations of sexism and derided by numerous social media users.
Earlier this week, the company came under fire for forcibly dragging a passenger off a plane after employees bumped him from the flight. Like the previous incident, this awful bit of customer service went viral on social media. This time, however, it was captured on video and uploaded to YouTube for all to see.
Millions of people watched the incident since the video hit YouTube, and the company issued an apology shortly afterwards. But what impact did the incident have on United’s stock?
United Airlines’ stock went up after the incident.
Despite millions of people crying foul on Facebook and Twitter, United’s investors still had faith in the company’s ability to perform. Sure, it was negative publicity, but United issued an apology and moved on for the moment. Their stock fell by over 2% before market hours on Monday, but many interested investors and traders bought the stock at this low. Their demand eventually drove the price to increase.
The air travel industry is particularly lucrative these days, as more people travel during the bettering economy. United is well-positioned to capitalize on this trend, and their customer numbers and stock are up within the last year. When the company announces their quarterly earnings next week, they could likely announce an increase in revenue and profit.
The incident eventually caught up to United.
Sure, air travel is booming and United seems to perform well, but bad press is bad press. Every mainstream media outlet covered the dragging incident, and the video was witnessed hundreds of millions of times on Facebook. Many are calling for a United boycott, something that would definitely cut into the company’s bottom line. Couple the outcry with the company’s tone-deaf non-apology and you have a recipe for severely tarnishing the brand. (The image of a company dragging a bloodied customer from a plane without their consent would certainly deter me from flying with the airline.)
The company’s stock is down over 2% before trading hours today. Though the video hasn’t had any immediate effect on their bottom line, they could see a decrease in passengers in the near future. The company would then have to reassure customers that they would not harm them (for real) to win them back, but time will tell if this boycott will have a substantial impact on the company…or if people will forget about it like last month’s incident.
China is pissed, too.
The incident also went viral on China’s popular Weibo network after the man being dragged was identified as Chinese. China is an important market for United Airlines, as they operate numerous daily flights between the country and America. A Chinese boycott could be extremely detrimental to United’s bottom line, as millions of Chinese citizens could opt for a different international airline to get between countries.