Delta Airlines Chief Executive Officer Ed Bastian said Wednesday that the massive IT outage that isolated thousands of customers earlier this month will cost the company $500 million.
Bastian said the figure included not only lost revenue but also “tens of millions of dollars per day in compensation and hotel costs” over the five days, an amount roughly in line with analysts’ estimates. Delta would not disclose the exact number of refunds and reimbursements it has processed, but a spokesman said it was “in the thousands.”
The outage, which lasted until July 25, caused the company to cancel more than 5,000 flights, more than it had cancelled in all of 2019. The outage was caused by a failed CrowdStrike software update that took thousands of Microsoft systems offline around the world, forcing the company to manually reset 40,000 servers, Bastian said.
After the outage, Delta’s platform for matching flight crews with aircraft was unable to keep up with the changes, causing further confusion.
This problem, Southwest Airlines Bad weather caused disruptions and upset customers over the 2022 holiday season, and Delta’s turmoil highlighted how a problem with one of the many technology platforms airlines rely on can cause widespread disruption.
While other airlines recovered more quickly from the CrowdStrike incident, Delta’s cascading disruptions and customer reaction triggered an investigation by the Department of Transportation. The meltdown was unusual for a company that markets itself as a premium airline, ranking among the top U.S. airlines for profitability and on-time performance.
Bastian told CNBC’s “Squawk Box” on Wednesday from Paris, where he visited last week, that airlines would seek compensation for damages caused by the disruptions, adding that “we have no other choice.”
“To get priority access to the Delta ecosystem on the technology side, we have to test that functionality. You can’t be in a mission-critical operation that runs 24/7 and say there’s a bug,” Bastian said.
CrowdStrike hasn’t offered Delta any financial assistance so far, beyond providing free consulting advice on dealing with the impact of the outage, Bastian added. A CrowdStrike spokesman said in an email that the company “is not aware of the litigation and has no further comment.” Microsoft did not immediately respond to a request for comment.
CNBC reported earlier this week that Delta Air Lines had hired prominent lawyer David Boies, best known for representing the US government in its landmark antitrust lawsuit against Microsoft, to help it seek damages from both CrowdStrike and Microsoft.
“We have to protect our shareholders, we have to protect our customers and employees, not just from the costs but from the damage to our brand and reputation,” Bastian said.
—CNBC’s Phil LeBeau contributed to this report.
