Delta Air Lines CEO Ed Bastian said Wednesday that the huge IT outage earlier this month that stranded hundreds of consumers will cost it $500 million.
Bastian said the figure includes not only lost revenue but “the tens of hundreds of thousands of dollars per day in compensation and hotels” over a period of 5 days. The quantity is roughly in keeping with analysts’ estimates. Delta didn’t disclose exactly what number of refunds and reimbursement requests it processed but a spokesman said it was within the “hundreds.”
The airline canceled over 5,000 flights, greater than it had in all of 2019, within the wake of the outage through July 25, which was sparked by a botched CrowdStrike software update and took hundreds of Microsoft systems all over the world offline. The corporate needed to manually reset 40,000 servers, Bastian said.
After the outage, Delta’s platforms that match flight crews to planes couldn’t sustain with the changes, resulting in further disruptions.
The difficulty was just like what Southwest Airlines customers suffered when it unraveled after bad weather during year-end holidays in 2022. Delta’s disruption shined a light-weight on how an issue with just one among the numerous technology platforms airlines depend on could cause large-scale disruptions.
Other airlines recovered faster from the CrowdStrike problem, and Delta’s cascading disruptions and customer response sparked an investigation by the U.S. Department of Transportation. The meltdown was rare for the carrier that markets itself as a premium airline with top rankings in profitability and punctuality amongst U.S. carriers.
Bastian, speaking from Paris, where he traveled last week, told CNBC’s “Squawk Box” on Wednesday that the carrier would seek damages from the disruptions, adding, “We now have no selection.”
“If you happen to’re going to be having access, priority access to the Delta ecosystem by way of technology, you’ve to check the stuff. You’ll be able to’t come right into a mission critical 24/7 operation and tell us we’ve got a bug,” Bastian said.
CrowdStrike has to date made no offers to assist Delta financially, Bastian added, beside offering free consulting advice on coping with the fallout from the outage. A CrowdStrike spokesperson said in an emailed statement that it has “no knowledge of a lawsuit and haven’t any further comment.” Microsoft didn’t immediately reply to a request for comment.
Delta hired outstanding attorney David Boies to hunt damages from each CrowdStrike and Microsoft, CNBC reported earlier this week. Boies is understood for representing the U.S. government in its landmark antitrust case against Microsoft.
“We now have to guard our shareholders. We now have to guard our customers, our employees, for the damage, not simply to the associated fee of it, but to the brand, the reputational damage,” Bastian said.
— CNBC’s Phil LeBeau contributed to this report.
