Delta Faces $500 Million Loss Following CrowdStrike Outage

As the fallout from the CrowdStrike IT outage continues to affect industries across the world, the CEO of Delta Air Lines has claimed that the crisis has cost the airline around half a billion dollars.

The mass outage, caused by a failed update of CrowdStrike antivirus software, caused chaos in the air travel industry on July 19, causing thousands of flights to be grounded across the globe. However, while most airlines were quick to recover their operations, Delta was particularly badly affected.

Photo: Delta, Airbus A319. Courtesy of Simon Ray / Unsplash

Delta canceled thousands more flights over the following days as it struggled to restore its online systems, particularly its crew-tracking platform. However, although the airline is now back to operating normally, the consequences of the outage and subsequent disruptions were profound.

Delta’s Financial Losses

In an interview with CNBC on July 31, the CEO of Delta, Ed Bastian, said that the outage is set to cost the airline $500 million. This estimation is not based solely on lost revenue from the thousands of flights Delta was forced to cancel but also on the “tens of millions of dollars per day” it spent on compensation for disrupted passengers.

Following the outage, Delta issued a travel waiver to affected passengers, allowing them to rebook alternative travel arrangements at no extra cost. The airline also provided accommodation and meal costs to those left stranded by the cancellations, while it also pledged to gift each affected passenger 10,000 Delta SkyMiles as an apology.

DOT Investigation

Delta is also under investigation by the U.S. Department of Transportation (DOT) over its disruption handling. If fined, its losses from the debacle could rise significantly further.

Ed Bastian was fairly critical of CrowdStrike, suggesting the issues behind the outage were unacceptable. He also indicated that Delta was pursuing legal action against the cybersecurity firm, although no lawsuit has yet to be confirmed.

“We have no choice,” said Bastian. “We’re not looking to wipe them [CrowdStrike] out, but we’re looking to make certain we get compensated – however they decide to – for what they cost us.”

Ed Bastian has been named by his peer CEOs as the 2023 Chief Executive of the Year / Photo: Courtesy of Delta News Hub

Bastian continued, “We have to protect our shareholders, we have to protect our customers, our employees, for the damage, not just the cost of it, but to the brand, the reputational damage.”

“If you’re going to be having priority access to the Delta ecosystem in terms of technology, you’ve got to test the stuff,” he added. “You can’t come into a mission-critical 24/7 operation and tell us we have a bug – it doesn’t work.”

CrowdStrike Rebuts

In a sharp rebuttal, CrowdStrike is pushing back against Delta’s claims of liability, accusing the airline of crafting a “misleading narrative” that shifts blame for the recent IT outage. Despite reiterating its apology, CrowdStrike’s external counsel expressed “deep disappointment” over Delta’s insinuations of gross negligence, firmly rejecting any suggestion of misconduct.

Photo: Delta Network Planning. Courtesy of Delta

CrowdStrike revealed that its CEO personally reached out to Delta’s leadership offering on-site assistance, which was met with silence. The company hinted at deeper questions, challenging why Delta lagged behind its competitors in restoring operations and why the airline declined free support from CrowdStrike experts.

A spokesperson for the cybersecurity firm stated, “Publicly posturing about a baseless lawsuit against a long-time partner is unproductive. We urge Delta to engage constructively and seek a cooperative resolution.” The ball is now in Delta’s court.