Delta Airlines has disclosed a significant financial setback due to a recent system outage linked to CrowdStrike, resulting in losses of approximately $550 million, including a $380 million decline in revenue this quarter. The financial erosion comes primarily from refunds and compensation from customers related to numerous flight cancellations, according to a recent securities filing by the Atlanta-based carrier.
The disruption, which resulted in the cancellation of approximately 7,000 flights, also resulted in $170 million in additional costs related to the technology failure and the effort to restore operations. Despite these challenges, the airline reported a $50 million savings in fuel costs due to the reduced number of flights.
The July 19 crash, which impacted millions of Windows-based systems worldwide, struck Delta at the height of its summer travel season, causing significant operational disruptions. It marked a significant departure from its reputation as a reliable, high-performance airline.
Delta CEO Ed Bastian emphasized the severity of the disruption, saying that such a prolonged operational disruption is unacceptable and that both customers and employees deserve better. He also noted that the airline’s staff has worked diligently to restore Delta’s industry-leading service levels.
Following the disruption, Delta flight cancellations surpassed the total for all of 2019, prompting the U.S. Department of Transportation to launch an investigation into the airline’s handling of the situation.
In response to Delta’s claims, CrowdStrike defended its actions, saying it maintained close communication with Delta’s security teams in the aftermath of the incident and offered support. However, Delta’s legal team, led by attorney David Boies, argued that the outage severely impacted 1.3 million customers and disabled 37,000 Delta computers, requiring a large compensation award for the damage caused to Delta’s business and reputation.
Delta’s dependence on Microsoft and CrowdStrike for approximately 60% of its critical applications and operational data was highlighted, underscoring the extensive human effort required to manage the crisis and resume safe and normal operations. Delta’s legal correspondence emphasized the need for CrowdStrike to acknowledge and rectify the substantial harm inflicted by the outage.
