United Airlines and the Price of Bad Press

It’s hard to avoid talking about United Airlines this week—between viral videos, public outrage, and a stock market response, it checks all the boxes: headlines, public companies, and a healthy dose of controversy. For anyone unfamiliar, here’s what happened: United needed to bump four passengers to make room for employees. Three accepted a $1,000 voucher. The fourth refused and was forcibly removed, sparking a media firestorm.

What caught my attention, though, wasn’t the act itself—it was the market’s response. You’d think an event like this would seriously damage shareholder value. Initially, United’s stock dipped 1.13%, but here’s the twist: other major airlines like Delta and Southwest closed the day up. Why? Because most people don’t directly own United Airlines stock—they hold it through ETFs or mutual funds, which also contain those other airlines. In fact, eight of United’s top twelve shareholders also own stakes in American Airlines. The result? Any customer backlash that shifts revenue from one airline to another barely dents these big investors. In the end, Berkshire Hathaway, for example, was still up over $100 million that day. If that’s not an argument for reevaluating how shareholder pressure works, I don’t know what is.

Are ETFs Creating Invisible Monopolies?

This leads us to a broader, more subtle problem: are ETFs reducing the pressure on companies to compete? If large shareholders are invested in all the major players, does it really matter if one of them loses public trust? Theoretically, antitrust laws exist to protect consumers from monopolies—but those laws weren’t designed to deal with today’s investing reality. When most shares are held through intermediaries, the ownership gets blurry. What happens when the same investor owns a significant chunk of every airline? Or every telecom company? Or every major bank?

The United incident is a case study in this complexity. Twenty years ago, shareholder backlash might have been a meaningful check on corporate behavior. Today, with diversified fund managers calling the shots, the consequences feel more diluted. The market still “punishes” companies, but not as effectively—and not always in ways that lead to meaningful change.

Flash Crashes and Market Illusions

All of this ties into a larger conversation about volatility. Remember flash crashes? Those sudden, sharp dips in stock prices often caused by a perfect storm of algorithms, high-frequency trading, and automatic selling? They’re rare—but they’re becoming more common. Why? Because while tools like ETFs, hedging, and algorithmic trading aim to reduce volatility, they sometimes create it.

The same instruments that smooth out day-to-day fluctuations can amplify panic during stress events. It’s a feedback loop: more automation leads to faster decisions, which leads to more movement, which leads to more automation responding. The result? A sudden, inexplicable drop—followed by a scramble to explain it.

The market always finds a way to correct itself. That’s the beauty of it—and the risk. It’s not the same market our grandparents knew. Individual investors now face a system influenced more by machines, models, and megafunds than traditional fundamentals.

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