Delta Air Lines CEO Ed Bastian said Wednesday that the massive IT outage earlier this month that stranded thousands of customers will cost it $500 million.
Bastian said the figure includes not just lost revenue but “the tens of millions of dollars per day in compensation and hotels” over a period of five days. The amount is roughly in line with analysts’ estimates. Delta didn’t disclose exactly how many refunds and reimbursement requests it processed but a spokesman said it was in the “thousands.”
The airline canceled over 5,000 flights, more than it had in all of 2019, in the wake of the outage through July 25, which was sparked by a botched CrowdStrike software update and took thousands of Microsoft systems around the world offline. The company had to manually reset 40,000 servers, Bastian said.
After the outage, Delta’s platforms that match flight crews to planes couldn’t keep up with the changes, leading to further disruptions.
The issue was similar to what Southwest Airlines customers suffered when it unraveled after bad weather during year-end holidays in 2022. Delta’s disruption shined a light on how a problem with just one of the many technology platforms airlines rely on can 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 among 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 have no choice.”
“If you’re going to be having access, priority access to the Delta ecosystem in terms of technology, you’ve got to test the stuff. You can’t come into a mission critical 24/7 operation and tell us we have a bug,” Bastian said.
CrowdStrike has so far made no offers to help Delta financially, Bastian added, beside offering free consulting advice on dealing with the fallout from the outage. A CrowdStrike spokesperson said in an emailed statement that it has “no knowledge of a lawsuit and have no further comment.” Microsoft didn’t immediately respond to a request for comment.
Delta hired prominent attorney David Boies to seek damages from both CrowdStrike and Microsoft, CNBC reported earlier this week. Boies is known for representing the U.S. government in its landmark antitrust case against Microsoft.
“We have to protect our shareholders. We have to protect our customers, our employees, for the damage, not just to the cost of it, but to the brand, the reputational damage,” Bastian said.
— CNBC’s Phil LeBeau contributed to this report.
Content Source: www.cnbc.com