United’s rollercoaster stock ride makes you wonder about the future
Yesterday’s rollercoaster ride for United Airlines’ stock makes you wonder about the airline industry’s future — and United’s future, in particular.
Many of the larger US airlines are under great scrutiny. Even with the price of oil falling nearly $40 since its high in May, it is still at historical highs.
United is beset by issues perhaps greater than its peers. While others have positioned themselves well for the coming storm by shoring up their balance sheets, United has been somewhat of a laggard. It also has some issues with its labor unions – particularly the pilots with whom it is currently fighting a protracted battle in court. The pilots union has published a Glenn Tilton Must Go site, in an effort to remove the current chief executive.
United’s stock didn’t fall in a vacuum. Clearly, many people are jumpy and expecting a bankruptcy to happen. While yesterday was generally a good — make that a great — day for the market, buoyed by the administration’s actions on mortgages over the weekend with the takeover of Fannie Mae and Freddie Mac, the major airlines index was off more than 3 percent.
Timothy O’Neil-Dunne blogs at T2 Impact.
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What’s interesting is that while Southwest took a brief hit when UAUA dived, LUV actually finished the day up a hair. What does that say about the market’s confidence in this airline?
Tribune, Google trade blame in United Airlines stock fiasco
Human error compounds computer error in the revival of a 2002 bankruptcy story that prompts a sell-off in UAL shares. News site owner Tribune is ‘looking into’ the matter.
By Tom Petruno
Los Angeles Times Staff Writer
September 09, 2008
Information can live in cyberspace forever. And that cost some investors in United Airlines parent UAL Corp. a load of money Monday.
Shares of UAL briefly plummeted as low as $3 early in the day — from $12.30 on Friday — after a 6-year-old story on the company’s 2002 bankruptcy filing resurfaced on the Web and was reported as news by an investment letter.
The shares bounced back after the market realized the report wasn’t current.
But investors who sold at the day’s lows are stuck: The Nasdaq Stock Market, where UAL stock is listed, said trades triggered by the erroneous report wouldn’t be rescinded.
What’s more, shares of other carriers, including Continental Airlines Inc. and AMR Corp., the parent of American Airlines, also briefly dived with UAL before rebounding.
UAL blamed the mess on a posting of a 2002 Chicago Tribune article on the South Florida Sun-Sentinel’s website.
The story then was picked up by Income Securities Advisors, a Florida investment newsletter, and disseminated as a one-line brief over Bloomberg News — triggering a wave of panic selling.
Tribune Co., the owner of the Sun-Sentinel (and also the parent of The Times), initially pointed a finger at Google Inc., saying it appeared that the search engine highlighted the story out of the Sun-Sentinel’s archives over the weekend, which generated traffic and caused the newspaper’s computer to move the story to a page of most-viewed articles.
But Google said the only reason its search engine “crawler” bothered with the story was that it was listed on the Sun-Sentinel page of most-viewed stories — and with the weekend date on it, instead of the 2002 date.
To the crawler, “it was a new item that said, ‘Hey, look here,’ ” Google spokesman Gabriel Stricker said.
A Tribune spokesman late Monday said the company was “still looking into” the matter.
As for how the story got to Wall Street, human error compounded computer error.
Richard Lehmann, who publishes the Income Securities Advisors newsletter, said his firm focuses in part on bonds of troubled companies. One of his reporters routinely searches the Web for news under “bankruptcy 2008,” he said. That search on Monday morning found the UAL story on a Sun-Sentinel news page with a Sept. 6, 2008, date.
The reporter, Lehmann said, thought it was fresh because of the date and because the Google search found the story on a current Sun-Sentinel page, which included an item on Hurricane Ike.
As a contributor to Bloomberg News, the newsletter generates information that goes out over Bloomberg’s news terminals worldwide.
About 11 a.m. PDT Monday, the reporter posted the information to Bloomberg. It appeared as a headline on the system that read: “United Airlines files for Ch. 11 to cut costs.”
As UAL’s stock crumbled and the company saw the headline on Bloomberg, a UAL spokesman told the news service that the report was inaccurate. Trading was quickly halted — but not before some investors let shares go for as little as $3 apiece.
The stock ended the day at $10.92, down $1.38, or 11.2%.
tom.petruno@latimes.com