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United Shares Slide as PR Nightmare Catches up With Investors

by Fred Imbert, CNBC /  / Updated 
Image: Security stand in the aisle before forcibly removing a United Airlines passenger from a plane
A man wearing a security jacket stands in the aisle before a United Airlines passenger is forcibly removed from a plane at O'Hare International Airport in Chicago on Sunday, April 9, 2017.Tyler Bridges / Twitter

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Shares of United Continental fell by more than 4 percent Tuesday as outrage over Dr. David Dao of Kentucky being dragged off an overbooked flight finally caught up to the stock. The shares were the worst performer in the S&P 500.

Videos of the incident went viral on social media and prompted CEO Oscar Munoz to apologize for having to "re-accommodate" customers after a two-hour delay. The confrontation happened on a United Express flight operated by Republic Airways.

The airline's stock, however, climbed nearly 1 percent Monday, not reacting much initially to the internet's response.

Overnight, though, even more graphic videos showing Dao — who grew up in Vietnam — being dragged off the flight, covered in blood, triggered further outrage in the Far East.

The top trending topic on Tuesday on microblog Weibo, China's take on Twitter, was #UnitedAirlinesforcespassengeroffplane.

Related: Here's Why It's Legal for Airlines to Kick You Off Your Flight

"This went to the next level when the CEO and the [United] executives began to respond," said Andy Swan of LikeFolio, which monitors social media for financial applications. "They threw gasoline on a fire."

Instead of viewing what transpired on a United plane Sunday evening as a "one-off" incident, now United's shareholders are questioning the competence of management in handling crisis scenarios, Swan said, hence why the stock is starting to drop.

"This is an enormous deal for shareholders," he said.

The apology note issued by CEO Munoz on Monday and then his letter to employees that evening almost "restarted the crisis," Swan added, saying he watched mentions of United skyrocket on social media for a second and a third time.

Related: United CEO Says Passenger Was 'Disruptive and Belligerent'

Munoz doubled down in the letter to employees, saying those involved "followed established procedures." He called the passenger "disruptive and belligerent." In one of the videos, the passenger said he was a doctor and had to return home to treat patients on Monday.

"When management stepped out — and [they did it] in most offensive way possible — you started to see negative mentions surge," he said. "[United] invited some really negative stuff on themselves."

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