Society

United's Market Value Drops By $1 Billion

| by Simone Stover

A video of a man being dragged off a United Airlines flight caught a lot of attention after the video went viral. Several people expressed anger toward the airline, taking to social media to express their feelings. However, this was not the only form of backlash that the company received; the incident has had a major impact on the company's stock.

According to the Courier-Journal, David Dao was a passenger on United Express Flight 3411, which was scheduled to travel from O'Hare International Airport in Chicago to Louisville, Kentucky, on April 9. United overbooked the flight and asked four passengers, including Dao, to give up their seats.

Videos taken by passengers of the event, which show Dao refusing to leave the plane, went viral after the incident. Three security guards attempted to remove him from his seat and ended up striking his head against an armrest in the process. Dao was then dragged down the aisle by his arms.

One of the officers involved in the incident has been placed on leave by the Chicago Department of Aviation. The department also released a statement condemning the incident for not lining up with standard operating procedures. 

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In the days following the event, several people ridiculed the airline on Twitter, reports The Washington Post. For example, one Twitter user dubbed the event "How To Pour Gasoline Into Your PR Dumpster Fire 101." 

Additionally, a report that said Dao claimed he was being discriminated against for being Chinese has been widely circulated on social media in China, with tens of millions of views.

Oscar Munoz, CEO of United Airlines' parent company, released a letter to United employees commenting on the incident. 

"While I deeply regret this situation arose, I also emphatically stand behind all of you," one section of his letter said, according to The Associated Press, "and I want to commend you for continuing to go above and beyond to ensure we fly right."

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In light of the incident and United's response to it, people in both the United States and China have called for a boycott of the airline, according to The Washington Post. 

Over the past year, United has reportedly made multiple changes in trying to improve their image and increase customer satisfaction, reports CNN Money. Updating its fleet and adding free snacks for passengers are among such changes. On April 10, United released its figures for March. The numbers reported a 3-percent growth over the past year. 

However, in light of the public outcry regarding the incident with Dao, United has experienced some negative financial repercussions. 

Shares in United fell by almost 3 percent on the morning of April 11. The company's market value was reduced by almost $1 billion. 

"This went to the next level when the CEO and the [United] executives began to respond," said Andy Swan of LikeFolio (a finance website), according to CNBC. "They threw gasoline on a fire."

He stated that the incident has caused shareholders to question the competence of United's leadership, calling it "an enormous deal for shareholders."

Sources: CNN Money, The Washington Post (2), Twitter, The Associated Press, Courier-Journal, CNBC / Photo credit: Tomas Del Coro/Flickr

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