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American Airlines Group Inc (NASDAQ:AAL) Stock Breaks After Passenger Revolt

American Airlines Group Inc (NASDAQ:AAL) stock was being hit before the market opened on Tuesday morning as the firm got hit with bad news form both Wall Street and the World at large. Evercore ISI, a research firm with a strong long term forecast for American Airlines, reigned in that outlook on Tuesday morning. At the same time news of an in-flight horror, and passenger reaction, landed on social media.

American Airlines Flight 408

A passenger on American Airlines flight 408 was removed from the plane after a member of staff became irate. The staff member had told the woman to move, and had repeated the order in a loud register after apparently not being heard the first time.

American Airlines removes a woman

The full context of the video isn’t quite clear at this time, but the group reaction on board the plane, it’s clear from the video, was one of protest. More than a dozen voices can be heard booing the staff of the airline as the woman was removed from the plane.

The video had been removed from YouTube more than once since being posted. Google said that it was removed because it might incite hatred or bullying. Another copy, hosted on LiveLeak, is doing the rounds on Tuesday. The incident is also the subject of one of the top posts on reddit at time of writing.

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American Airlines (NASDAQ:AAL) is, as of Tuesday morning, trying to formulate a response to the allegations of gross misconduct levied, by denizens of social media rather than the legal profession, against the firm. The court of public opinion doesn’t quite weigh as strongly as a real court, but the echo chamber of social media can make almost any issue quite scarring.

Wall Street looks down on American Airlines

While the drama from the American Airlines (NASDAQ:AAL) 408 incident was ongoing, Wall Street was taking a second look at the firm ahead of its earnings release for the three months through September. The firm’s numbers are set to arrive on October 23.

In a report published on Tuesday morning Evercore ISI, which had a Buy rating on the firm the last time it published research on it, put a Hold rating on American Airlines.

At time of writing shares in American Airlines were down by more than 2 percent in Tuesday’s pre-market trading. It’s not clear if the fall in value was driven by the Evercore decision to downgrade the firm, or the coming social media response to the firm’s treatment of the woman on flight 408.

In today’s day and age not all customer service matters. It’s clear that not all firms are able to reap the advantages of treating each and every customer with a high level of care. When an incident like this emerges, however, it can gain a lot of traction on social, and then traditional, media.

Once that occurs the brand damage can build into something difficult to forecast. We will have to wait for the firm to give a real response to the issue, and for the major media houses to get involved, before we can get some idea of how the story will play out. It’s likely, however, with so many in the footage saying it’s the last time they’ll fly American Airlines, that some traders are nervous ahead of Tuesday’s open.

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Paul Shea

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