Delta Air Lines Faces $550 Million Loss from CrowdStrike Outage, Plans Legal Action

Delta Air Lines disclosed on Thursday that last month’s massive outage caused by CrowdStrike resulted in a financial blow of approximately $550 million. The airline is now preparing to pursue legal action against both CrowdStrike and Microsoft to recover losses from the incident.

The financial toll from the outage includes a $380 million revenue shortfall this quarter, primarily due to refunds and compensation given to customers for the numerous cancelled flights. Additionally, Delta incurred $170 million in expenses related to the technological failure and efforts to restore operational stability. Despite these challenges, the airline noted a potential $50 million savings in fuel costs due to the reduced number of flights during the outage period.

The incident on July 19, which impacted millions of Windows-based machines globally, severely disrupted Delta’s operations at the peak of the summer travel season, leading to the cancellation of about 7,000 flights. This disruption not only stranded thousands of passengers but also damaged Delta’s reputation as a reliable premium carrier.

Delta CEO Ed Bastian expressed in a securities filing that such a significant operational disruption is unacceptable. He emphasized the airline’s commitment to returning to its industry-leading performance standards, which customers expect from Delta.

The U.S. Department of Transportation has also initiated an investigation into Delta’s handling of the outage and the subsequent flight cancellations, further highlighting the severity of the situation.

In response to Delta’s assertions, CrowdStrike defended itself in a statement, arguing that Delta is promoting a misleading narrative about the incident. CrowdStrike claims that their chief security officer was in direct communication with Delta’s chief information and security officer shortly after the outage began, offering support and information.

Legal exchanges have heated up, with Delta’s attorney, David Boies, stating that 1.3 million customers were affected and 37,000 Delta computers were shut down due to the outage. He criticized CrowdStrike for not taking sufficient responsibility for the incident, which he says severely harmed Delta’s business and reputation.

Boies further noted that about 60% of Delta’s mission-critical applications and data rely on services from Microsoft and CrowdStrike. The outage required extensive manual intervention by skilled crew specialists to reorganize flights and personnel to resume normal operations.

As Delta prepares for potential litigation to recoup its losses, the implications of the outage continue to resonate, affecting the airline’s operational and financial stability.

Sources: AirGuide Business airguide.info, bing.com, cnbc.com