United loses $900 million in market value

Shares of United Airlines (UAL) were down as much as 4.3% in trading on Tuesday after video surfaced Monday of a passenger being forcibly removed from a flight over the weekend.

The video went viral on social media on Monday, though shares of the airline actually rose to start the week, giving markets a temporary understanding that the company had dodged a major financial hit from the controversy.

On Tuesday, as the controversy surrounding the video failed to die down, shares dropped as much as 4.3%, or $3.10 per share, taking upwards of $950 million in market cap value away from the company based on 314 million shares outstanding.

Near 2:00 p.m. ET, the stock had pared some of its losses and was down about 2.8%, or $2.00 per share, putting its market-cap losses closer to $600 million.

And while stocks broadly were down on Tuesday, United’s losses far outpaced that of the broader market. After the market close on Monday, United also raised its forecast for first-quarter flight capacity and kept its passenger unit revenue guidance unchanged.

United had offered a $1000 voucher to anyone willing to give up their seat on the overbooked flight, according to a letter sent by Munoz to United employees on Monday obtained by the Associated Press.

But as Bloomberg’s Joe Weisenthal quipped on Tuesday, given the drop in United’s market cap it seems the actual offer price for that voucher could’ve been in the hundreds of millions of dollars and the company would still be making out fine.

In a statement following the video on Monday, United CEO Oscar Munoz said, “This is an upsetting event to all of us here at United. I apologize for having to re-accommodate these customers.”

Read More

 


source: https://finance.yahoo.com/news/united-airlines-shares-tumbling-140648573.html

No tags
  • John Doe

    My advice?……..Give free flights to EVERYONE…..For the next month. Is it worth it?….Hmmmmm….

  • Christian_Patriot7

    Boycott United!! It could have happened to you!

  • Ginger

    This is great news. United deserves to lose billions of dollars in revenue and stock value. They are a disgusting company that has no respect for their customers. The silly CEO only came out to apologize after the stock value began to tank. Otherwise, he was arrogant in asserting that the employees followed proper company policy. Well, good luck with your company policy as your company’s share holder value continues to sink. The CEO needs to be fired, and this poor guy who was assaulted on the plane needs a huge multi million dollar settlement for the poor treatment he received. As a customer, I will never fly United, unless they start offering free flights. And, even then, I may have to think twice before taking that dive.

    • remuda

      and guarantees of confirmed seating. Over-booking should be limited to stand-by’s…and awareness of competitors’ unfilled seats to the same destination within a reasonable offset time. After all, this is the ‘info-age’…eh? And the PR benefits of alternate referrals are unlimited…

  • remuda

    Did those ‘crew-members’ make it to KY ok? Bet they have stories…!
    Oh…and let’s not forget the other ‘displaced passengers’ & the security guys…
    How’d the Dr.sneak back aboard?