Delta Air Lines Faces $500 Million Loss from IT Outage

Delta Air Lines CEO Ed Bastian revealed on Wednesday that the recent IT outage, which left thousands of customers stranded, will cost the airline $500 million. This figure includes lost revenue and “tens of millions of dollars per day in compensation and hotel expenses” over a five-day period, aligning with analysts’ estimates. Although Delta did not specify the exact number of refunds and reimbursement requests processed, a spokesman confirmed it was in the “thousands.”

The outage, which resulted in the cancellation of over 5,000 flights—more than the airline canceled in all of 2019—was caused by a faulty CrowdStrike software update that affected thousands of Microsoft systems globally. Bastian noted that Delta had to manually reset 40,000 servers following the incident.

The disruption hindered Delta’s ability to match flight crews with planes, exacerbating the chaos. This issue was reminiscent of Southwest Airlines’ struggles after severe weather disrupted operations during the 2022 year-end holidays. Delta’s incident highlighted how a problem in a single technology platform could trigger widespread disruptions across the airline industry.

While other airlines recovered more swiftly from the CrowdStrike issue, Delta’s prolonged disruptions and customer service response prompted an investigation by the U.S. Department of Transportation. This meltdown was unusual for Delta, which prides itself on being a premium carrier with top rankings in profitability and punctuality among U.S. airlines.

Speaking from Paris on CNBC’s “Squawk Box” on Wednesday, Bastian stated that Delta would seek damages for the disruptions, emphasizing the necessity of doing so. He criticized the lack of thorough testing by CrowdStrike, saying, “If you’re going to have 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 added that CrowdStrike had not offered any financial assistance, only providing free consulting advice on handling the aftermath. A CrowdStrike spokesperson, in an emailed statement, claimed to have “no knowledge of a lawsuit and no further comment.” Microsoft did not respond immediately to requests for comment.

Delta has retained renowned attorney David Boies to seek damages from both CrowdStrike and Microsoft. Boies is well-known for representing the U.S. government in its landmark antitrust case against Microsoft.

Bastian underscored the importance of protecting Delta’s shareholders, customers, and employees from the financial and reputational damage caused by the outage, stressing that the airline must address both the cost and the impact on its brand.

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