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United won’t fire anyone over dragging debacle, CEO says

By Michael Sasso, Bloomberg
Published: April 18, 2017, 4:20pm

United Continental Holdings Inc. won’t fire anyone over last week’s incident in which a passenger was dragged off a plane, an episode that sparked worldwide condemnation of the airline.

“It was a system failure across various areas, so there was never a consideration for firing an employee or anyone around it,” Chief Executive Officer Oscar Munoz said Tuesday. He acknowledged “lots of conjecture” about his own fate at the nation’s third-largest carrier and said “the buck stops here.”

Munoz faced Wall Street for the first time since David Dao’s forcible removal on April 9, apologizing again for the airline’s handling of the incident. So far, corporate customers have been “supportive” of United during the public relations crisis, President Scott Kirby said on a conference call to discuss first-quarter earnings. It’s too soon to tell if the bad publicity hurt bookings, the carrier said.

Munoz is traveling to China soon on a previously scheduled business trip and will meet with officials there about their concerns over the incident, he said. The story spread rapidly on social media in the Asian nation, which is a critical market for Chicago-based United.

Even as he gets pilloried over the scandal, Munoz is facing skepticism from Wall Street over his intention to boost growth in flights and seats. Analysts asked why the company wasn’t instead trying to boost profit margins, which fell in the first quarter and trail those of Delta Air Lines.

The questions spotlighted concern among United’s investors as the carrier plans to boost seating capacity by as much as 4 percent across its network this quarter, including a domestic increase of as much as 5.5 percent. Munoz told analysts the expansion is needed to win back the company’s “natural share” of the market at big hub airports including in Newark, N.J.

“Market share is not a conversation we have in this room or with our board,” Munoz said on the conference call. “It is all about margin.”

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