Delta Air Lines CEO Ed Bastian announced that the recent IT outage that caused significant disruptions and stranded thousands of customers will cost the company $500 million. This figure includes not only lost revenue but also the expenses incurred for compensation and hotels over a period of five days. Analysts’ estimates align with this amount, although Delta did not disclose the exact number of refunds and reimbursement requests processed.
The outage, which occurred through July 25, was triggered by a faulty software update from CrowdStrike, a cybersecurity company, which caused thousands of Microsoft systems to go offline. Delta had to manually reset 40,000 servers to resolve the issue. However, the airline’s platforms that match flight crews to planes struggled to keep up with the changes, leading to further disruptions in operations.
This incident highlights the vulnerability of airlines’ technology platforms and the potential for large-scale disruptions caused by problems with just one of these systems. Similar to what Southwest Airlines experienced during the 2022 year-end holidays due to bad weather, Delta’s disruption brought attention to the need for robust and resilient technology infrastructure in the airline industry.
While other airlines were able to recover more quickly from the CrowdStrike problem, Delta’s cascading disruptions and customer response prompted an investigation by the U.S. Department of Transportation. This incident was highly unusual for Delta, a premium airline that consistently ranks high in profitability and punctuality among U.S. carriers.
Speaking from Paris, Bastian emphasized that Delta would seek damages from the disruptions, stating that they have no choice but to protect their shareholders, customers, and employees from the financial and reputational damage caused. Delta has hired prominent attorney David Boies, who is known for representing the U.S. government in its antitrust case against Microsoft, to pursue damages from both CrowdStrike and Microsoft.
Bastian criticized CrowdStrike for not adequately testing their software before implementing it in a mission-critical operation like Delta’s. He highlighted the importance of thorough testing to ensure the reliability and stability of technology systems in the airline industry.
Despite the financial impact and the need to seek damages, CrowdStrike has not offered any financial assistance to Delta. They have only provided free consulting advice on managing the fallout from the outage. Microsoft has not yet responded to requests for comment on the matter.
In conclusion, Delta’s CEO emphasizes the necessity of protecting the company’s interests and the importance of holding technology providers accountable for the damages caused by their faulty software updates. The incident serves as a reminder for airlines to prioritize robust technology infrastructure and thorough testing to prevent future disruptions.
