In 2009 United Airlines lost 180 million USD in stock value and an untold amount of reputational damage — all because of a disgruntled passenger. 

Musician Dave Carroll took a United Airlines flight and checked in his $3,500 Taylor guitar. When he arrived at his destination he found the guitar severely damaged. 

He filed a claim with United Airlines, but was told he was ineligible for compensation because he had failed to make a claim within its stipulated “standard 24-hour timeframe”. For the next nine months, and with mounting frustration, Carroll tried to get the airline to listen and reconsider their decision. It wouldn’t budge.

Carroll then did the only thing he could as a musician: he wrote a song to protest. Upon its release in July 2009, the song swiftly gained traction on YouTube and iTunes, morphing  into a public relations nightmare for United Airlines.

Within just four weeks of the video’s online debut, United Airlines’ stock price plummeted by 10%, resulting in a staggering loss of approximately $180 million in shareholder value.

What could United Airlines have done to prevent a criss-like situation like this? 

It could, for starters, build itself an Early Warning System. The hallmarks of an early warning system is that there is a mechanism for the company to intercept warnings early, to cascade it upstairs and to have appropriate decisions and responses made.

Early warning systems originate from both internal and external sources within a company’s ecosystem:

  • Internally, early warnings can stem from various sources such as the company’s internal systems, employee reports, customer care reports, etc. Any identified risk, no matter how minor, should be carefully monitored if it needs immediate action, and recorded for future learning and improvement.
  • Externally, early warning signals are gleaned from social listening, which involves monitoring social media platforms for any mentions or discussions related to the company. This could range from a single tweet to a TikTok post, indicating potential issues or concerns raised by customers or the public. Additionally, daily monitoring of conventional media sources such as news outlets and publications can provide valuable insights into emerging issues or trends that may impact the company

Having an early warning system in place is essential for proactively addressing potential problems before they escalate into crises. But it only goes half way toward preventing crises from occurring at United Airlines — the other half is changing its culture from one that is crisis prone to crisis ready.

An early warning system, however, is a good starting point for this cultural change. Has your company even taken this first step toward being crisis ready?

Written by Agnes Karina Rosari

Partner, Crisis Management Lead