In the Internet age, it doesn't take long for a single, erroneously posted story to cause a lot of damage. Just ask United Airlines.
After an old story about United's 2002 bankruptcy filing resurfaced on the Web as new news, it triggered a selloff Monday that chopped down the carrier's shares by 75 percent before trading was halted. United shares partially recovered after the error became public and trading resumed.
United blamed the drop on the appearance of a Dec. 10, 2002, Chicago Tribune story on the South Florida Sun Sentinel's Web site and launched an investigation. Both papers are owned by Tribune Co.
United said the date on the story appearing on the Sun Sentinel site had been changed. The story was removed from the site by midday. In a written statement, the airline also said it was seeking a retraction.
But the Sun Sentinel was quick to deflect blame.
Joseph Schwerdt, deputy managing editor-interactive for the Sun Sentinel, told the Chicago Tribune that internal tracking records show no one had opened the original story file since 2003. The story would have been available via a search on the site, but no one outside the paper should have had access to the story file, Schwerdt said.
The Tribune news story about the incident also pointed out that the Sun Sentinel story did not have any discernible impact on United shares until after 10:53 a.m., when it was posted to the Bloomberg News Service. The story was posted to Bloomberg by a Miami investment advisory firm, Income Securities Advisor.
According to reports, a researcher for Income Securities, which posts stories about distressed debt securities directly to Bloomberg, became aware of the story early Monday after searching for bankruptcy situations using the Google search engine. After the terms "bankruptcy" and "2008" were typed into Google, the Sun Sentinel story was the first story in a list of Google results, said Richard Lehmann, president of Income Securities.
United, which exited bankruptcy in February 2006, said it has been executing its business plan "to successfully navigate through an environment marked by volatile fuel prices and continues to have strong liquidity."
But some industry observers weren't surprised the resurrected bankruptcy story quickly sparked panic.
"A part of the reason why investors reacted so dramatically is because airlines are on such shaky financial footing," Jim Corridore, an equity analyst at Standard & Poor's, told Reuters.