United’s CEO turns contrite as fallout spreads from passenger mistreatment

As public outrage grew and the stock took a hit over the forceful removal of a bloodied passenger, United’s top executive turned contrite, apologizing and launching a review of the company’s policies.

The mea culpa Tuesday by Oscar Munoz, chief executive of United Airlines’ parent company, followed several botched attempts to quell the scandal that has drawn political fire, international headlines and ridicule from late-night television hosts.

The furor was sparked by video and photos, captured on other passengers’ cellphones, of airport police dragging traveler David Dao’s limp body off a crowded plane in Chicago on Sunday to make room for company personnel.

“Like you, I continue to be disturbed by what happened on this flight and I deeply apologize to the customer forcibly removed and to all the customers aboard,” Munoz said Tuesday. “No one should ever be mistreated this way.”

He promised to disclose results from his investigation by April 30.

Several lawmakers from both sides of the aisle demanded answers from Munoz and a formal investigation by U.S. Transportation Secretary Elaine Chao.

“At a time when the airline industry is earning record profits, it is our hope that the industry can make great strides to improve customer service and implement best practices,” said a letter signed by several lawmakers including Sens. Charles E. Schumer (D-N.Y.) and Al Franken (D-Minn.).

White House spokesman Sean Spicer called the video of the incident “troubling,” but stopped short of saying federal officials should investigate.

New Jersey Gov. Chris Christie asked the Transportation Department to suspend federal regulations that allow airlines to overbook flights and remove passengers at their discretion.

Dao, a doctor from Kentucky, was among those picked to be booted from a flight to Louisville, but he refused to leave, prompting Chicago airport police to pull him screaming from his seat. An officer who helped drag him away was suspended pending an investigation, the city’s aviation department said.

Dao told a Kentucky television station that he was not doing well and that he was still in a hospital in Chicago. When asked what his injuries were, Dao said “everything,” WLKY-TV reported.

Little is known about Dao or why he was so adamant about remaining on the flight. The Louisville Courier-Journal and others reported Monday that Dao was convicted of six felonies related to his medical practice in 2004, in which he was accused of illegally prescribing painkillers. He surrendered his medical license in 2005 and was given five years of supervised probation.

Dao has a history of mental health problems, including depression, anxiety and post-traumatic stress disorder, for which he has received treatment, according to state licensing records. The records said Dao had been previously cited by a hospital in the 2000s for “disruptive conduct” and was ordered to seek evaluation for “anger management” issues. Regulators cleared his return to medical practice in 2015

Those reports didn’t sway critics, who showed no mercy to United.

The Dubai-based airline Emirates released a video ad featuring swelling music and smiling passengers, urging travelers to “fly the friendly skies … this time for real.”

Late-night talk show host Jimmy Kimmel aired a parody United commercial with a smiling flight attendant brandishing brass knuckles and the tagline: “We’re United Airlines, you do what we say, when we say, and there won’t be a problem.”

The dictionary company Merriam-Webster even jumped into the fray, tweeting a definition for “volunteer” as “someone who does something without being forced to do it.”

And in China, the fastest-growing source of foreign tourists to the U.S., 120 million people viewed the video, according to news reports. Dao was overheard complaining that he was targeted because he is Chinese — a charge that could play heavily in China, where United is trying to grow its market share.

Passenger rights groups say the treatment of Dao is only the latest insult to the flying public.

Airlines are reaping hefty profits because of lower fuel costs and a series of mergers that has put control of about 80% of domestic flights in the hands of United, American, Delta and Southwest airlines. Meanwhile, coach passengers have endured shrinking legroom, narrower seats and more fees for onboard food, drinks, entertainment and checked luggage.

“The next time this happens we may well see passenger riots,” Paul Hudson, president of Flyersrights.org, wrote in a letter Tuesday to the Transportation Department.

Public relations experts put much of the blame for the mounting controversy on United for creating the incident and then refusing to take responsibility for it sooner.

“The longer you wait, the grander the gesture you have to make,” said Nicole Ferry, partner and executive director of strategy at the New York branding firm Sullivan. “So whereas this apology would have been great five minutes after the incident or even a day after it, now Munoz needs to show how he’s putting his weight behind changes that will ensure that things will be different in the future.”

Munoz’s apology on Tuesday appeared to be more heartfelt than the statement he released a day after the bloody scene in which he spoke of “having to re-accommodate” four customers. In a letter to employees, Munoz had cast Dao as a “belligerent” customer who “refused to comply” with requests to give up his seat.

Munoz’s apology didn’t do much to buoy the stock of United Continental Holdings, the airline’s parent company, which fell more than 4% on Tuesday before recovering somewhat to close at $70.71, down 81 cents, or 1.1%. That decline is the equivalent of a $255-million cut from the company’s market value.

Industry analysts didn’t agree on whether the controversy would have a lasting impact on the airline’s bottom line. For the last nine months, shares of United Continental have been on the rise, thanks to low fuel costs and strong demand for air travel.

“It’s a black eye and it might hurt them somewhat in the near term, but long term it will not have a material impact on revenues and earnings,” said Philip Baggaley, airline analyst with Standard & Poor’s.

Baggaley noted that other airlines have survived similar blows to their reputations, including a computer glitch in January that forced the cancellation of hundreds of flights on Delta Air Lines.

But UC Irvine professor Jan Brueckner, whose wife cried after seeing the online video, predicted that United won’t easily recover. Brueckner said he had heard of travelers tearing up their membership cards to United’s loyalty reward program.

“I think people are enraged by this, and that kind of rage could change people’s loyalty for their airlines,” he said.

Times staff writers Matt Pearce and Tracey Lien contributed to this report.

hugo.martin@latimes.com

To read more about the travel and tourism industries, follow @hugomartin on Twitter.

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UPDATES:

6:30 p.m.: This article was updated with additional details and analysis.

2:30 p.m.: This article was updated with more of Munoz’s apology, the company’s closing stock price and experts discussing the effects of the incident on United’s future.

1 p.m.: This article was updated with an afternoon stock price.

12:20 p.m.: This article was updated with additional comment from United Airlines CEO Oscar Munoz.

This article was originally published at 10:20 a.m.