CHICAGO A nearly 6-year-old news story on the 2002 bankruptcy filing of UAL Corp UAUA.O resurfaced on the Internet on Monday, clobbering the airline's shares as some traders mistook the report as current and plausible news.
UAL, parent of United Airlines, and several news organizations involved were blindsided by the resurrection of the Chicago Tribune article. UAL, which exited bankruptcy more than two years ago, demanded a retraction by the Florida Sun-Sentinel, where the out-of-date report first appeared.
UAL shares fell 76 percent to $3 after the article was posted on the Bloomberg financial news service. The magnitude of the decline may underscore the lack of confidence investors have in UAL and the troubled airline industry in general.
"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.
UAL, US Airways Group Inc LCC.N, Delta Air Lines Inc (DAL.N) and Northwest Airlines Corp NWA.N have each reorganized in Chapter 11. But persistently high fuel prices have eroded airline earnings and earlier this year analysts began looking at the liquidity positions of airlines for signs of potential insolvency.
"United continues to execute its previously announced business plan to successfully navigate through an environment marked by volatile fuel prices and continues to have strong liquidity," the company said in a statement.
Trade in UAL shares was halted on Nasdaq after the old report hammered shares. The stock rebounded somewhat when trading resumed, ending down 11.2 percent at $10.92 compared with the Amex airline index .XAL, which fell 2.3 percent.
CAUSE OF INCIDENT UNDER INVESTIGATION
The Sun-Sentinel did not explain how the article, first published on December 10, 2002, appeared on its site. Tribune Co, which owns both the Sun-Sentinel and the Chicago Tribune, acknowledged the story was not current and said it was "looking into the situation."
Joe Schwerdt, who runs the Sun-Sentinel's website, told the Chicago Tribune that company records show no one at the paper had opened the story file since 2003 and no one outside the paper had access to the file.
Tribune officials said Web traffic began to spike Saturday night on the Sun-Sentinel site and continued into Sunday. The article was subsequently removed from the Sun-Sentinel website.
Tribune spokesman Gary Weitman said his company was investigating what role Google Inc (GOOG.O) computers may have had in crawling the Sun-Sentinel Web site over the weekend, driving up traffic to the old news and pushing it onto the "Popular Stories: Business" section of the Sun-Sentinel.
Google spokesman Gabriel Stricker denied his company's news tracking services first sparked the surge in traffic and said Google News' identification of the story reflected existing interest on the Sun-Sentinel site.
"The article first appeared on the Sun-Sentinel site, independent of Google News," Stricker said.
In an official statement on the company's blog, Google said the UAL story was available through Google News but was not shown as a headline. Google said it removed the story "as soon as it was notified that it had been linked to in error."
"It has been widely reported that many readers were unable to determine the original date of publication of this article, and our (automated computer) crawling was similarly unable to recognize that the article was old," Google stated.
The article hit shares only after it reached a much wider audience on Monday, when a staffer for investment advisory firm Income Securities Advisors posted it to Bloomberg.
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.
Lehmann said his employee followed normal procedures and Income Securities Advisors has no shares in UAL. "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.
(Additional reporting by Robert MacMillan in New York and Eric Auchard in San Francisco; Editing by Gerald E. McCormick and Lincoln Feast)