Delta says chaos after CrowdStrike outage cost it $380 million in revenue

Delta Air Lines on Thursday said last month’s CrowdStrike outage and subsequent mass flight cancellations cost it some $550 million and reiterated that it is pursuing damages against the company as well as Microsoft.

The financial impact includes a $380 million revenue hit in the current quarter “primarily driven by refunding customers for cancelled flights and providing customer compensation in the form of cash and SkyMiles,” the Atlanta-based airline said in a securities filing.

The incident, in which it canceled some 7,000 flights, also meant a $170 million expense “associated with the technology-driven outage and subsequent operational recovery,” the carrier said, adding that its fuel bill will likely be $50 million lower because of the scrubbed flights.

Delta struggled more than its competitors to recover from the July 19 outage, which took millions of Windows-based machines offline around the world. The disruptions occurred at the height of the summer travel season, stranding thousands of Delta customers, a rare incident for the carrier that markets itself as a premium carrier that gets top marks for reliability.

“An operational disruption of this length and magnitude is unacceptable, and our customers and employees deserve better,” CEO Ed Bastian said in the filing. “Since the incident, our people have returned the operation to an industry-leading position that is consistent with the level of performance our customers expect from Delta.”

Delta’s cancellations in the days after the outage topped its tally for all of 2019. The U.S. Department of Transportation last month said it is investigating Delta’s response to the outage and flight cancellations.

CrowdStrike responded in a statement on Thursday that Delta “continues to push a misleading narrative” and said that the company’s chief security officer was in “direct contact” with Delta’s chief information and security officer “within hours of the incident, providing information and offering support.”

In a letter to CrowdStrike’s attorney on Thursday, Delta’s lawyer David Boies said 1.3 million customers were affected by the outage and that it shut down 37,000 Delta computers.

CrowdStrike and Microsoft lawyers earlier this week fired back at Delta, saying they reached out to offer Delta help. Microsoft on Wednesday suggested that Delta hasn’t invested enough in its technology compared with rivals.

“If CrowdStrike genuinely seeks to avoid a lawsuit by Delta, then it must accept real responsibility for its actions and compensate Delta for the severe damage it caused to Delta’s business, reputation, and goodwill,” Boies said in the letter to CrowdStrike on Thursday.

About 60% of Delta’s “mission-critical applications” and their data depend on Microsoft and CrowdStrike, he said, adding that the disruption “required significant human intervention by skilled crew specialists to get Delta people and aircraft to the right locations to resume normal, safe operation.”