Market Overview

Wall Street Shrugs Off Latest Airline PR Disaster

Wall Street Shrugs Off Latest Airline PR Disaster

United Continental Holdings Inc (NYSE: UAL) made headlines Sunday after having denied two teenage girls entry to a flight on principles of modesty. The gate agent allegedly requested that the passengers change out of spandex leggings or pull dresses over them before boarding their plane.

United stock opened down 1 percent Monday and continued to fall an additional 0.8 percent as the Twitter Inc (NYSE: TWTR) world reacted in outrage at the airline’s regulations. But United defended its dress code enforcement.

The company’s Twitter team added that the affected passengers were United pass travelers who serve as corporate ambassadors and are thus held to a stringent code of conduct.

Customers who are not pass travelers are exempt from particular dress requirements.

After continued public resistance, United assured prospective passengers that it approves of leggings and general casual attire, provided they are in “good taste.”

Other PR Gaffes

Airlines recently boasted a publicity boost from Warren Buffett after the long-time critic of air stocks announced new stakes in three major companies. However, the public relations storms have since flared.

On Jan. 22, United grounded all domestic flights for two hours because of a computer outage, and, just weeks later, a glitch in Sabre Corp (NASDAQ: SABR)’s global reservation system prompted hundreds more delays. United stock plunged 3.3 percent during the first occasion but remained relatively unaffected by the second.

Similar systems crashes canceled hundreds of Delta Air Lines, Inc. (NYSE: DAL)’s late-January flights to heighten the chaos of concurrent travel bans. In July 2016, Southwest Airlines Co (NYSE: LUV) grounded 2,300 flights due to downed systems. The respective outages prompted a 4-percent hit in Delta and an 11-percent drop in Southwest shares.

In 2009, a disgruntled musician sunk United shares 10 percent after the airline ignored his complaints of a damaged guitar and denied requests for restitution. The company soon battled a viral video of a song titled “United Breaks Guitars” and allegedly lost $180 million in value.

Recent flight-related terrorist activity and government-instituted travel bans have also disrupted airlines and their major hubs, but neither unavoidable PR hits significantly impacted stocks.

Related Links:

JPMorgan’s Aviation, Transportation, Industrials Conference Concludes Wednesday; Expect Volatility In Airline Stocks

The Recent Pullback In Airline Stocks Doesn’t Scare This Bull

Warren Buffett May Simply Take Over This Airline Entirely

Posted-In: United Breaks Guitars Warren BuffettNews Travel General Best of Benzinga


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