Airline shares have regained some altitude since midsummer, thanks largely to receding oil prices and (so far) no major hurricane-related damage in the Gulf Coast. But investors in United Airlines Inc. parent UAL Corp. got a reminder Monday of how jittery the market still is when shares lost more than 60% of their value in minutes due to a false bankruptcy report.
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Details of what happened are still leaking out, but it appears a Chicago Tribune story written in 2003 -- when UAL did file for bankruptcy -- appeared on sister paper the Florida Sun Sentinel's Web site sometime Monday, according to UAL, with its date updated. That story was picked up as breaking news on a number of different outlets, causing the investor panic. The Tribune and Sun Sentinel are both owned by Tribune Co.
United has since put out a statement saying the reports "are completely untrue," and demanding a retraction and investigation into what it calls an "irresponsible posting." The stories, which were dated Sept. 6, 2008, have since been pulled, and the stock has recovered some but not all of its losses.
It might be some time before we discover whether the error was caused by some mundane Tribune reprogramming of the Sun Sentinel archives, or if some devious hacker succeeded in a scheme to drive down the price of United's shares. But whatever the reason, the incident, and the number of people who did not question the report when it first surfaced, is a reminder that signs of recovery in the airline sector is fledging at best.
UAL, for the time being, is a stable company highly unlikely to file for Chapter 11 protection in the near future, despite some pundit calls to the contrary. But should oil spike or already strained relations between the airline and its unions further deteriorate, newspapers could be writing fresh, and accurate, bankruptcy stories about the company before the end of 2009. - Lou Whiteman
See Chicago Tribune story on the false report
See UAL's statement
See Dealscape: Liquidation is not the answer for United Airlines
See Dealscape: United pilots demand ouster of CEO
See Dealwatch: Airlines
