UAL shares walloped by new posting of old news
A nearly 6-year-old news story on the 2002 bankruptcy filing of UAL Corp (UAUA.O: Quote, Profile, Research, Stock Buzz) 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 UAL, which exited bankruptcy more than two years ago, demanded a retraction by the Florida Sun-Sentinel, where the out-of-date report first appeared.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 free instant credit score estimator. “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: Quote, Profile, Research, Stock Buzz), Delta Air Lines Inc (DAL.N: Quote, Profile, Research, Stock Buzz) and Northwest Airlines Corp (NWA.N: Quote, Profile, Research, Stock Buzz) 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.
Filed under: finance by Wolf