:max_bytes(150000):strip_icc()/INV_DeltaJet_GettyImages-1687562765-8d03266825914761abadbad4aad62a64.jpg "Delta CEO Says Outage Cost $500M, Leaving Airline ‘No Choice’ But to Seek Damages")
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Key Takeaways
- This month’s Microsoft outage caused by a CrowdStrike software update cost Delta roughly $500 million over five days, Delta CEO Ed Bastian said Wednesday.
- Bastian said Delta has “no choice” but to seek damages over the outage, following reports Tuesday that the company hired a high-profile attorney to pursue compensation.
- Delta was the hardest hit of the major U.S. airlines by the outage, with cancellations extending into the middle of last week before the company was able to recover.
The Microsoft (MSFT) outage that stemmed from an update to CrowdStrike’s (CRWD) security software and ground thousands of flights cost Delta Air Lines (DAL) at least $500 million over the course of five days, CEO Ed Bastian told CNBC Wednesday.
Bastian said the impact wasn’t just lost revenue from having to refund tickets for canceled flights but “tens of millions of dollar per day” spent on hotel accommodations and other compensation for its affected customers. He said the company has “no choice” but to seek damages.
Delta Was Hardest Hit Major U.S. Airline
CrowdStrike stock sank Tuesday on the report that Delta has hired a high-profile attorney to pursue compensation for its losses. Bastian told CNBC that CrowdStrike has offered free consultation services to help the airline recover from the outage, but nothing beyond that.
Delta was the hardest hit of the major U.S. airlines because of their reliance on Microsoft software for a system that schedules their flight crews, making Delta’s thousands of canceled flights difficult to reschedule because of the uncertainty that a full crew would be able to be arranged.
“If you’re going to be having priority access to the Delta ecosystem in terms of technology you’ve got to test this stuff,” Bastian said. “You can’t come into a mission critical, 24/7 operation and tell us we have a bug. It doesn’t work.”
DOT Probing Delta’s Response to Outage
The Department of Transportation is also probing Delta’s response to the outage to investigate whether the airline adequately protected its customers during the outage crisis. Southwest Airlines (LUV) faced a $140 million civil penalty over its handling of a 2022 winter storm that caused nearly 17,000 flights to be canceled after the DOT determined Southwest didn’t follow consumer protection laws.
Delta won’t be alone in pursuing damages from CrowdStrike, as the first class action suit against the tech company was filed Tuesday. The Plymouth County Retirement Association filed suit on behalf of CrowdStrike shareholders, who the association claims were harmed by CrowdStrike’s claims that its software was tested and secure, when in reality a small error could lead to a substantial outage that could affect that company’s stock price.