Travel agency stock prices dropped after CEO Lee Bergdahl announced his retirement, and other investors took notice.
The market was down about 1.4% in midday trading, according to FactSet data.
Shares of Airfare.com Inc., an airline-retailer, and American Airlines Group Inc., a travel-referral company, were among the worst performers, losing about 2.5% and 2.9%, respectively.
In addition, other investors were more bullish on airlines, which have benefited from low oil prices.
The Dow Jones Industrial Average fell 495.50 points, or 0.7%, to 22,724.70, the S&P 500 lost 3.7% to 2,963.40 and the Nasdaq Composite dropped 13.7%.
Investors were concerned about the company’s plan to shutter its airfare business and the airline’s stock price dropped.
Airfare purchases are a major part of the company and have been a driver of revenue growth.
“It was an incredibly difficult time for Airfare,” said Steve Smith, a portfolio manager at S&P Capital IQ.
“I don’t think it’s going to be easy to get the company back up to the level of profitability it had been in.
It was really disappointing.”
The fallout from Bergdahls departure, which occurred a few weeks before the company announced it was closing its airline business, has led to a series of calls for a new CEO.
“If you don’t get a new chief quickly, you’ll be stuck with someone who’s going through the same pain,” said Jason Blundell, chief investment officer at C.D. Howe Wealth Management in New York.
“You can’t do the job well and expect to be able to get on the board of a new company.”
In a statement on Friday, Airfare said it was “in discussions with potential candidates” for the job, which includes “a number of senior executives from the airline, including its current CEO and chief financial officer.”
“We appreciate the leadership the Airfare family has shown in recent months, and look forward to working with the leadership team at Airfare to provide a swift turnaround for Airfares business, customer service and reputation,” the statement read.
Bergdachls departure also drew criticism from investors, with some calling for his ouster.
“We don’t know how to move forward,” said Scott Schumacher, portfolio manager of the Boston-based ETF S&p Capital IQ, which tracks the stock market.
“How do you make an investment if the board is not transparent?
It’s not the way to do it.
This is going to take a lot of soul searching.””
The last thing we want to see is a company that is on the verge of a full-blown crisis, with the stock plummeting by 10% or 15% in the first day, and the market going to go down by 20%,” said Stephen Shulman, a fund manager at BlackRock.
“When you get into a crisis, you don.
It’s going out.”
Bloomberg contributed to this report.