United Passenger Incident: Should the board step in?

By Eve Tahmincioglu
April 11, 2017

From a heart attack, to computer problems, to a leggings' scandal, United Airlines and its CEO Oscar Munoz have faced a host of public relations troubles.

But the latest passenger incident, exploding on social media and beyond, may test the company’s board more than ever.

“It is a public relations disaster,” says John Coffee Jr., a professor at Columbia Law School who specializes in corporate governance and securities law, adding that it’s not something the board could have averted. The question is what will the directors do now?

While boards aren’t expected to be PR experts, he stresses, directors need to say, “'We want to do a study with an independent expert.’ You have to do something that says, ‘We are making a move that is pro-passenger,’ even if that move is small.”

Some believe United’s directors may have to do more than that.

With typical PR snafus the board doesn’t get involved and relies on management and their crisis management consultants to respond, explains Mark Rogers, the chief executive of BoardProspects, an online community for directors.

“This one, however, rises to level where you would want the board involved,” he says. “It’s now incumbent upon [United Board Chairman] Richard Milton to really take a much more of active role and be the public face.”                          

“Unfortunately,” he adds, “Munoz lost credibility.”

Related article: Learning from United's PR Crisis, 4 Tips for Boards

Rogers points to the letter the CEO sent to employees about the passenger beating, which he says did little to help consumers outraged by the video believe the airline was focused on putting the customer first.

In the letter, Munoz called the passenger “disruptive”, and his response to the event posted on Twitter did not appease an angry public:

Indeed, the response seemed to only enrage people further. United has been trending since yesterday on social media with mainly negative comments about the incident, and today the main hashtag has been #NewUnitedAirlinesMotto.

“This story is taking on a life of its own,” notes Rogers. “The consequences are significant with the stock down 4%, that’s a $750 million loss since the start of day. The real implications will be if reservations go down.”

The board has to take on a bigger role, he advised because “there’s a real sense, that as a result, the CEO has become feckless.” Consumers, he adds, are going to have a “hard time believing him on customer issues going forward.”

Munoz is doing his best trying to convince customers he's on their side. After 3 pm EST today, he tweeted yet again with an updated statement and a promise to review the situation.

United did not return a request for an interview about the recent incident and the board's participation.

Oscar Munoz