United Airlines Stock Price Doesn't Drop Despite PR Disasters

When a shocking video of a passenger being dragged off of a United Airlines (NYSE: UAL) plane went viral in April there were questions as to how the Chicago-based company would weather the storm of criticism. The video caused widespread condemnation of the airline carrier, including calls for boycotts.

Months later, it appears that consumers either have a short memory or collectively responded to the incident with an apathetic shrug. The forced removal of 69-year-old Dr. David Dao failed to dent the airline’s earnings in its recent report.

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On Tuesday, United reported an $818 million profit for the most recent quarter, a 39 percent increase from last year. United also reported that for the first half of 2017 they had 71 million passengers, a 4.2 percent increase from last year.

Investors have also taken notice. United’s share price dropped 1.1 percent Tuesday, but it’s up 8.5 percent for the year.

“Redoubling our focus on the customer experience, closing the margin gap with our peers and delivering strong returns to our investors, we have made important progress and moved United decisively forward,” said United CEO Oscar Munoz in a statement. “No single quarter constitutes a trend and we still have much further to go before we fully realize the potential of this airline and exceed the expectations of our customers. But, we also know that one success begets another and the strong financial and operating performance we posted this quarter adds to the momentum that all of us here at United are determined to build upon.”

The Dr. Dao video began as a phenomenon when it was posted by a fellow passenger on Twitter. Dr. Dao allegedly received a broken nose, a concussion, two knocked-out teeth and sinus problems from the incident after he refused to give up his seat on an overbooked flight. He eventually settled a lawsuit with the airline for an undisclosed amount.

The public relations nightmare may have been overcome by a limited number of options. The majority of flights in the U.S. are controlled by only four airlines: United, Delta, American and Southwest, the New York Times reported Tuesday.

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“It’s very difficult at this point in time for consumers to exact a penalty against airlines that have exhibited poor customer service,” said Northeastern University economics professor John Kwoka Jr. to the Times.

Despite United’s success, it still trails Delta Air Lines' (NYSE: DAL) profits. Delta’s second quarter profits were $1.2 billion, about 30 percent higher than United’s.