Freefall ... United Airlines shares dropped after a 2002 story about it failing for bankruptcy resurfaced online / NEWS.com.au
Old story about airline`s bankruptcy appears online
Spreads to traders after being picked up by Google, Bloomberg
Airline`s shares dive by as much as 76 per cent
A SIX-year-old news story about United Airlines filing for bankruptcy has resurfaced on the internet, causing investors to flee the airline`s stocks which plummeted 76 per cent.
Some of the biggest US news organisations, including The Chicago Tribune, Bloomberg and Google News, were involved in the story being mistaken as credible and new by traders.
United Airlines was blindsided by the resurrection of a December, 10 2002 Chicago Tribune article which for a still unkown reason appeared on the website of its sister publication the Florida Sun-Sentinelon Sunday in the "Popular Stories: Business" section.
Joe Schwerdt, who runs the Sun-Sentinel`s website, said that company records showed no one at the paper had opened the story file since 2003 and no one outside the paper had access to the file.
The Tribune Company, the parent company of the Sun-Sentinel, said it was investigating the role Google News played in spreading the story but the search engine has denied doing anything wrong.
"The December 10, 2002, story contains information that would clearly lead a reader to the conclusion that it was related to events in 2002," Tribune said.
"In addition, the comments posted along with the story are dated 2002. It appears that no one who passed this story along actually bothered to read the story itself."
Google Business Product Manager Josh Cohen wrote in a blog that Google`s software searched the internet for new stories and the only date attached to the Sun-Sentinel`s article was September 7, 2008.
"We removed this story from the Google News index as soon as we were notified that it had been linked to in error," Mr Cohen wrote.
"It has been widely reported that many readers were unable to determine the original date of publication of this article, and our crawling was similarly unable to recognise that the article was old."
The article hit the airline`s shares only after it reached a much wider audience on Monday, when a staffer for investment advisory firm Income Securities Advisors saw it on Google and posted it to the Bloomberg financial news service.
Richard Lehmann, president of Income Securities Advisors, said the company employs reporters to comb the internet for investment news. The reporters post their findings to Bloomberg.
The staffer on Monday typed the search terms "bankruptcy" and "2008" into the Google search engine, which revealed the Tribune story on the Sun-Sentinel site.
Mr Lehmann said his employee followed normal procedures and Income Securities Advisors has no shares in United Airlines. "We have no economic interest in United Airlines," he said.
A Bloomberg spokesperson said that since the story was not written by Bloomberg, it was not edited by Bloomberg editors.
The magnitude of the decline may underscore the lack of confidence investors have in United Airlines and the troubled airline industry in general.
UAL, parent of United Airlines, stocks lost 76 per cent of their value on Monday before trading was halted.
UAL ended up losing 11 per cent of their value on the Nasdaq Stock Market on Monday. Overnight, the shares shed a further 32 cents, or 2.9 per cent, to $US10.60.
"A part of the reason why investors reacted so dramatically is because the airlines are on shaky financial footing," said Jim Corridore, equity analyst at Standard & Poor`s.
He said stock in any company would have fallen on such a report, but not as much as UAL shares fell. "I don`t think we would see nearly the level we saw," he said.
The airline industry has been battered by soaring fuel prices that have undone much of the progress airlines made during an industry-wide restructuring.
We can expect more of this as papers slash their news staff and hire Gen Y's who think google is god of all knowledge. Proves you can never really trust anything on the web.
Posted by: Reece of Melb 2:47pm today
A great example of how a small mistake by one person could lead to the collapse of a large organisation. Posting an old story could have resulted in tens of thousands of jobless from the airline and associated companies (aka Ansett) increasing the stress on families even further. Everyone has a duty of care in everything they do...even if it is searching for a news article.
Posted by: Chris Ghea of Melbourne 2:17pm today
definitely insider trading
Posted by: amanda 2:14pm today
Brilliant! It sucked in all the dummies too panicked to check the authenticity of the "news" article before they dumped their shares. Imagine the crush as they all tried to squeeze through the exit - sheep. Some smart trader is going to make a fortune. I love it.
Posted by: Michael of NSW 2:11pm today
Ironic that this story is actually 3 days old. Not quite as bad as the situation described in the article, but still. A 3 day old story is not NEWs.
We welcome your comments on this story. Comments are submitted for possible publication on the condition that they may be edited. Please provide your full name. We also require a working email address - not for publication, but for verification. The location field is optional.Read our publication guidelines.
Submit your feedback here:
Search for more stories on this topic on Newstext, our news archive service. Click here
