United Airlines CEO calls passenger's removal 'a watershed moment'

United-Passenger Removed-Social Media
A United Airlines passenger plane lands at Newark Liberty International Airport.

United Airlines executives said Tuesday that it was too early to know whether the furor over an airline passenger's being dragged from a United flight last week had hurt travel bookings.

“There has been concern from corporate accounts,” president Scott Kirby said, on a conference call to discuss first-quarter earnings. “They want us to fix this. They want us to do the right thing.”

Chief executive officer Oscar Munoz, asked about a threatened boycott by customers in China —  the passenger, David Dao, who was violently pulled off Flight 3411, was born and educated in Vietnam; he is now an American citizen — noted that he met with the Chinese consulate in Chicago to discuss the events of April 9.

Munoz said he will travel to China “in a couple weeks to have further conversations with customers and related governmental officials.”

The CEO said he emailed a “personal note” to hundreds of thousands of United’s “most loyal” frequent fliers and “highest-end" customers. “The response rate has been pretty high and positive. Obviously, a lot of people have ideas and thoughts about how we can make things better," he said.

Asked whether there has been a fall-off in bookings by leisure travelers in recent days, Kirby said that the week before Easter is “normally a very low booking period. We don’t have any quantifiable data.”

With the busy spring and summer travel season ahead, Kirby said, the airline has not lowered its projected forecast for passenger volumes.

The questions came as United executives discussed better-than-expected first-quarter earnings. Munoz said the violent treatment of Dao, 69, who was taken off the Louisville, Ky.-bound flight by law enforcement officers after he refused to give up his seat for crew members in Chicago, was a “watershed moment” and “a humbling learning experience for all of us here at United, and for me in particular.”

Munoz said no one will be fired. "The buck stops here. I'm sure there was lots of conjecture about me personally," he said. "It was a system failure. There was never a consideration of firing an employee."

He also pledged to make “policy changes to ensure this never happens again” and to communicate any actions by April 30.

United, the third-largest U.S. airline by passenger traffic, beat analyst expectations and earned $96 million, or 31 cents a share, in the first three months of this year, a decline from $313 million, or 88 cents a share, a year ago, based on higher fuel costs and the impact of new labor contracts. Revenue was $8.42 billion, up 2.7 percent, from a year earlier and better than the expected $8.38 billion. Traffic rose 2.2 percent on a 2.6 percent increase in capacity — seats and flights.

Excluding onetime special items, United earned $129 million, better than the average Wall Street estimate of $116 million.

Analyst Hunter Keay, with Wolfe Research LLC, said in a client note that “this fiasco where a man was dragged off a United plane” was “truly a bad situation that shouldn’t have happened and United handled badly afterward.” Nevertheless, “we expect it will blow over. These things usually do. But we do believe policy changes are likely.

“United didn’t drag the guy off the plane (that would be the Chicago Department of Aviation Security),” Keay said. “Obviously, United messed up here, and exacerbated the situation with its initial response(s).”  Keay said he expects “United’s bookings haven’t been materially impacted.”

United shares closed down Tuesday 4.27 percent, or $3.02, to $67.75.

Continue Reading