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For United Airlines, Discounting PR Advice Cost Millions

UAL Lost Millions by Not Following PR Advice

Much has been written and posted about the United Airlines-Dr. Dao incident over the past several weeks.  The reaction has displayed quite a range―from legal commentary about passenger rights to the opinions of airline personnel (or their spouses) about the topic of unruly passengers to financial analysis about the decline in United Airlines market capitalization/stock share price to the debate among crisis communications professionals about United’s failure to take PR advice ― including the CEO’s numerous, tepid apologies.

The consensus has been that the entire situation was handled poorly by all involved at or on behalf of United Airlines.  With the case now settled for an undisclosed amount, the timing is appropriate to dissect United CEO statements and the ways in which the “Communicator of the Year” failed completely as a consequence of debatable legal counsel.

Yes, legal counsel was most likely the culprit and in the communications story.  During those times when a company must decide how to respond to a crisis situation, a small group of executives gather to assess the situation.  The group usually includes key members of the executive or “C” suite along with legal and public relations counsel.

Meetings tend to be blunt assessments of the crisis issue and how it might impact the company.  The session doesn’t assign blame―instead it focuses on ways to move past the issue with as little “blow back,” collateral damage, and negative impact to the company as possible.  The meeting looks at potential brand damage in the eyes of employees, suppliers, vendors, customers and shareholders, and others having a financial relationship with the company.

As part of this meeting, legal counsel weighs in with the legalities of the situation―likely legal risks.  In addition, the public relations/crisis management executives or agency counsel with PR advice about the impact of the crisis to public perceptions of the company.

With these moving parts in mind, let’s take a quick look back at the United timeline of events:

Sunday, April 9:  The central incident―Dr. Dao being physically dragged off of a United Airlines flight.

Monday, April 10:  The following day, videos of the incident had gone viral and collective fury was fomenting among the general public.  United CEO Oscar Munoz issued his first statement, apologizing for having to “re-accommodate [the] customers.”

Tuesday, April 11:  The CEO statement poured gasoline on the fire of the public’s furor.  United Airlines (UAL) stock fell by 4.4% at one point during Tuesday’s trading, briefly erasing $994.2 million in market capitalization.  UAL’s stock drop prompted journalist Anthony De Rosa to summarize the public reaction in one tweet:  “United Airlines stock is being re-accommodated.”  During this trading session, Mr. Munoz issued another, more “humane” apology which was published on cnn.com at 3:20pm ET.  As a result, the stock staged a modest recovery by the end of the trading day, closing down 1.1% from UAL’s Monday closing price.

Looking back at the CEO statements, we can see that the first statement apologized for the inconvenience but did not inject any empathy or humanity.  The statement was a cold approach that might seem correct in a text book or cookie cutter view but probably did not reflect PR advice.  It would have also seemed legally correct and prudent to advising counsel.  It omitted the sentiment that would appease the public outcry and dampen the financial repercussions.  Following this approach cost UAL almost one billion dollars in market capitalization, if even briefly.

The United Airlines response also offers a warning to other companies and CEOs―do not discount or underestimate public outcry in the age of social media.  Utilizing legal counsel to assess legal risk is critical to any crisis situation.  However, legal counsel must also acknowledge that there is a communications function and relevant PR advice that must address the public reaction to a crisis.  It is in the managing of that public reaction that a company’s reputation can be determined and maintained.   The legal and communications functions and objectives are not at odds with each other nor mutually exclusive.  They are intertwined and both need to be a respected part of the crisis solution.

The wheels of justice may turn slowly, but the court of public opinion renders swift and often unforgiving verdicts.

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About Bobbie Wasserman

Bobbie Wasserman, M.B.A., is managing director of Wave2 Alliances, a firm that builds or restructures corporate communication departments for multi-channel companies. She has worked with several direct selling firms, including in-house as VP of Public Relations for ViSalus and is a former VP of Corporate Reputation and Crisis Management at Edelman.

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