United’s Munoz goes from savior to man on hot seat real fast
Bloomberg News
For most of his 19-month tenure, United Continental Holdings Inc. CEO Oscar Munoz has cleaned up messes left behind by others. Now he’s mopping up a PR disaster that’s unfolded on his watch.
After United ordered a passenger forcibly removed from a plane in Chicago shortly before departure to make room for a United employee, Mr. Munoz’s initial response made the company a punch line on social media. He said United had to “re-accommodate‘‘ the man, who was bloodied in the encounter with security officials. In a subsequent letter to employees, the CEO called the customer “disruptive”‘ and “belligerent”‘ when he wouldn’t relinquish his seat.
“It’s sort of a self-immolation and makes you wonder about his choice as CEO,” Jeffrey Sonnenfeld, senior associate dean for leadership studies at the Yale School of Management, said of Mr. Munoz’s handling of the crisis. He “worked at Coke and Pepsi and AT&T, and someone would have thought he had a better customer sensitivity.”
Almost 24 hours later, after global condemnation of the airline’s behavior had time to sink in, Mr. Munoz struck a far more contrite tone.
“The truly horrific event that occurred on this flight has elicited many responses from all of us: outrage, anger, disappointment. I share all of those sentiments,” Mr. Munoz said in a statement Tuesday. “I deeply apologize to the customer forcibly removed and to all the customers aboard. No one should ever be mistreated this way.”
On Wednesday he said the carrier no longer will rely on law enforcement to remove seated, paying customers.
“This can never, will never, happen again on a United Airlines flight,” he said on ABC’s “Good Morning America.” Mr. Munoz said he hasn’t considered resigning.
He committed the thirdlargest U.S. airline to “a thorough review” of its policies for handling oversold flights and vowed to report back to the public by April 30. “I promise you we will do better,” Mr. Munoz said Tuesday.
Yet the damage had already been done. With a few ill-chosen words, Mr. Munoz stoked the flames of an already raging social-media firestorm and squandered goodwill he had worked hard to generate by forging a turnaround plan since joining the company in September 2015. He has overseen a 23 percent stock rally since then, compared with 13 percent for the Bloomberg U.S. Airlines Index.
Previously known for his deft touch in rescuing United from a corruption scandal, weathering a proxy fight and winning unprecedented labor peace, now he’s the head of an airline that, for some passengers, has instantly become Public Enemy No. 1.
Some people said on United’s Facebook page that they would boycott the Chicago-based carrier. Others said on Twitter that they’d canceled their United-affiliated credit cards — a key revenue source for airlines.
In China, a crucial part of United’s lucrative trans-Pacific network, the incident was a focus of social media and editorials in the statecontrolled Global Times newspaper. The hashtag #UnitedForcesPassengerOffPlane was the top trending item on Sina Weibo, the equivalent of Twitter. The man who was removed, David Dao, appeared to be of Asian descent.
Delta Air Lines — which itself saw a meltdown in recent days after the cancellation of 4,000 flights over five days after thunderstorms — “is bestpositioned to take share as it has focused Asia operations on China and away from Japan in recent years,” Bloomberg Intelligence analyst George Ferguson said in a note. Gains will be limited for American Airlines, a distant No. 3, while the largest Chinese carriers will benefit the most, he said.
Mr. Dao was receiving treatment in a Chicago hospital for his injuries, according to a statement from lawyers who said they represent him. Video posted to Facebook and Twitter showed him as he was dragged out of his seat and down the aisle of the plane after refusing to give up his seat.
For Mr. Munoz, the timing of the worldwide outcry is, at the very least, extremely awkward and at worst a serious setback for his overhaul of United, which suffered for years as the industry laggard in both profitability and on-time performance.
In an ironic touch, Mr. Munoz just last month was named “Communicator of the Year for 2017” by PRWeek. The public-relations industry publication said Mr. Munoz “has shown himself to be a smart, dedicated, and excellent leader who understands the value of communications. That was March 17. Nine days later, a United Airlines gate agent stopped two girls in leggings from boarding a plane - initiating a public relations crisis when a passenger tweeted about it and United quickly responded that it had the “right to refuse passengers who are not properly clothed.”
Hours later, after thousands had joined in the outrage, the company clarified that the girls had been traveling on a company pass.