Delta Rejects CrowdStrike Help, Faces $500 Million Loss from Outage

Delta Air Lines experienced a significant operational disruption last month, leading to over 5,000 flight cancellations. The fallout from this incident has been costly, with Delta CEO Ed Bastian reporting to CNBC’s “Squawk Box” that the airline faced an estimated $500 million in losses, including customer compensation. This occurred during one of the busiest travel periods of the year.

In the aftermath of the outage, which was attributed to a faulty software update, Delta informed cybersecurity firm CrowdStrike and tech giant Microsoft of its intent to pursue legal claims to recover the damages. Delta’s attorney, David Boies of Boies Schiller Flexner, has been central to these discussions.

CrowdStrike, on the other hand, argues that its liability is limited to less than $10 million, as stated in their contract. Michael Carlinsky, CrowdStrike’s attorney from Quinn Emanuel Urquhart & Sullivan, emphasized that CrowdStrike had offered on-site assistance immediately following the outage, but did not receive a response from Delta. Carlinsky also accused Delta of creating a “misleading narrative” about CrowdStrike’s role and responsibility in the incident.

Amidst these legal threats, CrowdStrike has committed to a more cautious approach in deploying software updates, planning to release them in stages according to a preliminary post-incident report. This decision comes as CrowdStrike’s shares have dropped significantly, over 36%, due to the widespread impact of the outage across various sectors using their software on Microsoft’s Windows OS.

Meanwhile, Delta is under pressure to maintain transparency and accountability to its shareholders and the public. As this legal battle unfolds, the airline must also preserve extensive documentation related to its IT infrastructure and business continuity plans from the past five years.

The situation remains tense as both companies navigate the aftermath of this significant disruption, with CrowdStrike hoping for a cooperative resolution with Delta. CrowdStrike’s fiscal second-quarter results are anticipated on August 28, which may provide further insights into the financial impact of the incident on the firm.

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