Delta Air Lines Chief Executive Ed Bastian said Wednesday that the massive IT outage that occurred earlier this month and stranded thousands of customers will cost the company $500 million.
Bastian said the figure includes not only lost revenue but also “tens of millions of dollars a day in compensation and hotels” over a five-day period. The amount roughly matches analysts’ estimates. Delta did not disclose exactly how many refunds and reimbursement requests it processed, but a spokesman said it was in the “thousands.”
The airline canceled more than 5,000 flights — more than it canceled in all of 2019 — in the wake of the service outage through July 25, which was triggered by a botched CrowdStrike software update and knocked out thousands of Microsoft systems around the world. The company had to manually reboot 40,000 servers, Bastian said.
After the outage, Delta's platforms that link flight crews to planes couldn't keep up with the changes, leading to further disruptions.
The problem was similar to what Southwest Airlines Customers suffered when it went down due to bad weather during the 2022 holiday season. Delta’s outage highlighted how a problem with just one of the many technology platforms airlines rely on can cause large-scale disruptions.
Other airlines recovered more quickly from the CrowdStrike problem, and Delta’s chain of disruptions and customer response prompted an investigation by the U.S. Department of Transportation. The collapse was unusual for the airline that promotes itself as a premium carrier with top rankings for profitability and on-time performance among U.S. carriers.
Bastian, speaking from Paris where he traveled last week, told CNBC's “Squawk Box” on Wednesday that the airline would seek damages for the disruptions, adding: “We have no other choice.”
“If you want to have priority access to the Delta ecosystem in terms of technology, you have to test the material. You can't just walk into a mission-critical operation 24/7 and tell us we have a bug,” Bastian said.
CrowdStrike has not yet made any offers to financially assist Delta, Bastian added, other than offering free advice on how to deal with the fallout from the service disruption. A CrowdStrike spokesperson said in an emailed statement that it is “not aware of a lawsuit and has no further comment.” Microsoft did not immediately respond to a request for comment.
Delta has hired prominent attorney David Boies to seek damages from 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, from damage, not only in terms of costs, but also brand damage, reputation damage,” Bastian said.
— CNBC's Phil LeBeau contributed to this report.
