Penny Wise Pound Foolish

On Sunday evening, April 9, United Continental caused a passenger to be forcibly removed from a flight between Chicago O’Hare and Louisville, KY.

By acting in what appears to have been in full adherence to the appropriate rules, United Continental may have saved some money and transported a flight crew to Louisville in order to avoid cancelling a flight scheduled for April 10.  But the cost of the resulting fall out is too large to estimate.

United had some choices.  For example, they could have raised the compensation for voluntary disembarkation to whatever it took to get four passengers to give up their seats.  They could even have charted a flight to move the flight crew to Louisville.  In a world of cell phone cameras, they managed to find the worst possible course of action.

Investors should note that, management matters.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA®