Chinese whispers trigger panic
Market confidence in airlines and travel operators is already low, but one airline skirted disaster when out-of-date information hit the New York Stock Exchange.
United Airlines filed for Chapter 11 back in December 2002. Chapter 11 in the USA is a "last chance saloon" for struggling companies, a legal arrangement giving them some protection from creditors and a chance to get back on their feet before the receivers are called in. United Airlines did indeed return to profit, coming out of Chapter 11 some four years later.
In the present day of 2008, the original 2002 story from one of the Tribune group of papers somehow resurfaced on Google News. Google insists the story appeared on the South Florida Sentinel's website, (a Tribune Group newspaper) on the Saturday evening of September 6th. The Sentinel insists Google must have pulled it from the archives. Either way, it should be a minor error of no consequence. However, the original story carried no date-stamp and Google, believing it to be part of a current news feed, date-stamped it as September 6th, 2008. Two days later, Monday 8th, a journalist found the six year old story in Google News and, believing it to be hot off the presses, added it to the Bloomberg news content service. Headlines from Bloomberg are delivered to Wall Street monitors where brokers were presented with "United Airlines files for Ch 11 to cut costs". Within an hour, the price of United Airlines stock had dropped from $12.30 to just $3 per share before trading in the company was suspended pending investigations.
This story says something about the way the financial markets operate and also exposes how easy it would be for someone to start a damaging false rumour with the intention of picking up shares in a company while they were at artificially low levels. It also says something about the standard of journalism involved, that no-one questioned the story, or tried to verify it against other independent sources, even though someone with knowledge of the industry should have thought it unusual that United were filing for Chapter 11 for a second time. In the past it seems we were all too willing to believe things printed in the newspapers. Nowadays it seems we are all too willing to believe things on the internet.
18th September 2008
This article comes from the SKILLZONE email newsletter, published monthly since January 2008, and covering topics related to technology and the internet. All articles and artwork in the SKILLZONE newsletter are orignal content.