The crash of TWA Flight 800 has become a case study in crisis communications gone very flat. But the controversy more pointedly illustrates that surviving a crisis requires surveying the status of your company long before you're in the hot seat and managing your reputation with shareholders.
TWA has faced - and continues to face with the National Transportation Safety Board's hearings which began in Baltimore last week - a cornucopia of criticism and negative PR, including accusations from angry members of the victims' families to the ever-probing press. One thing the scrutiny has guaranteed this company is that it will be working for a while to restore faith in its company, both on Wall Street and in the world at large.
"Companies in this position historically knee-jerk to a price drop (lowering prices) but that isn't the way to go," says Kim Saxton, VP of research science for WalkerInformation, a market research firm based in Indianapolis that measures and manages stakeholder relationships. "Most important, what companies should do is restore that comfort level" among stakeholders.
In the world of instant news, stakeholders have grown to include a wide body of audiences, but the most critical core is always customers, employees, the financial community (analysts, bankers, financial institutions) and opinion leaders, which include officials and the press. But shareholders, unlike the press, aren't going to just hang their hats on whether or not a company has been caring.
Battling the Cameras & Mikes
TWA's stance since the crash has been to market the company: to promote its fares and to focus on its future. (This story has become enigmatic in nature: a lot of people probably know that TWA hasn't come out on top during this PR war but probably fewer people realize that the company has spent tens of millions of dollars on funerals, memorial services and counseling.)
But if you examine the TWA controversy from a strictly humanistic perspective, all the elements of bad PR seem to be there: confusion (an investigation sidestepped by claims the plane was downed by a missile; murky messaging (the mainstream media certainly hasn't done a princely job of helping TWA out of its perception mess): and suffering constituent relationships (families of the victims have been vocal in criticizing the airline).
But look at it from a business perspective and it seems like the company has done what all good MBAs would advise: focus on business as usual and make your company more attractive to invest in and use. Take a look at the list of press releases posted on the TWA's Web site, http://www.twa.com, and you'll see how the company has continued to tout the airline: out of more than 100 press releases archived online in the past year, less than five releases deal directly with the Flight 800 issue.
But despite those efforts, its stock, which closed at a healthy 191/4 on June 18, 1997, (a month before the crash), has never regained that status. Although it has enjoyed sporadic growth since the crash, the lingering story has always been that there's no answer about what caused the tragedy, not that the company's doing better financially.
There are several signs that show that the company's gaining stronger financial footing. This month, analysts at Alex Brown and Paine Webber upgraded TWA's stock to a buy status and recently it's announced several impressive investor relations moves, including that it completed an $86.3 million private placement of 1.725 million shares, according to Dave Garino, a Fleishman-Hillard partner that helps TWA manage it investor relations. (WalkerInformation, Kim Saxton, 317/843-8538; TWA, Jim Brown, 410/649-7270; Fleishman-Hillard, Dave Garino, 314/982-0551)