Talk about jumpy!
An erroneous headline that flashed across trading screens Monday, saying United had filed for a second bankruptcy, sent the airline’s stock plummeting.
United Airlines shares fell to about $3 from more than $12 in less than an hour before trading was halted, wiping more than $1 billion in value. Its shares closed at $10.92, down 11.2 percent.
By the end of the day, fingers were pointing in many directions to assign blame.
United blamed an old Chicago Tribune article that, it said, was posted on the Web site of The South Florida Sun-Sentinel newspaper. That article was picked up by a research firm, Income Securities Advisors, which then posted a link to it on a page on Bloomberg News, which sent a news alert based on the old article.
But the newspaper’s editor and the Tribune Company, which owns The Sun-Sentinel, denied that the paper had run the article on its Web site, saying it could be found only in its archives.
The episode was a reminder of how negative news, rumors and even outdated articles can travel at lightning speed, with some investors selling before pausing to check facts.
“That’s how much confidence people have in our system, when you can take the stock of a major corporation to zero in about 10 minutes,” said R. Thomas Buffenbarger, president of the International Association of Machinists and Aerospace Workers, which represents mechanics and other employees at the nation’s airlines.
Added Philip A. Baggaley, an airline industry analyst with Standard & Poor’s Ratings Services: “Given that there’s been so much bad news in the past half year, it means that investors are very nervous about the airlines.”
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