Delta Sees $380 Mln Revenue Hit From Microsoft-CrowdStrike Outage

(RTTNews) - Delta Air Lines, Inc. estimates the massive IT outage caused by Microsoft Corp. - CrowdStrike Holdings, Inc. and related impacts, including more than 7000 flight cancellations, would hurt the airline direct revenue of around $380 million.

In a filing with the U.S. Securities And Exchange Commission, Ed Bastian, Delta's Chief Executive Officer, said that company is pursuing legal claims against CrowdStrike and Microsoft to recover damages caused by the outage, of at least $500 million.

On July 19, the outage hit worldwide operations of major banks, airlines, media outlets, and hospitals, among others, who use Microsoft Windows operating system linked to cybersecurity firm CrowdStrike. The issue was caused after a defect found in CrowdStrike's single content update for Windows hosts.

The faulty software update, behind the "largest IT outage in history", had knocked out around 8.5 million computers globally and resulted in chaos in many major sectors including airline operation, including thousands of flight cancellations.

The impact of the outage was extended to many more days, and many U.S. airlines, including American Airlines, United Airlines, and Frontier Airlines among others, experiencing issues.

Delta now said it experienced operational disruption resulting from Microsoft and CrowdStrike-caused outage, causing around 7,000 flight cancellations over five days.

For the September quarter, the company now estimates the direct revenue impact of the incident to be $380 million, primarily driven by refunding customers for cancelled flights and providing customer compensation in the form of cash and SkyMiles.

Further, non-fuel expense associated with the technology-driven outage and subsequent operational recovery is estimated at $170 million, primarily due to customer expense reimbursements and crew-related costs.

Delta also projects fuel expense to be $50 million lower as a result of the 7,000 flight cancellations, which impacted projected year-over-year September quarter 2024 capacity growth by approximately 1.5 points.

Bastian said, "An operational disruption of this length and magnitude is unacceptable, and our customers and employees deserve better. 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."

Meanwhile, Delta was under investigation by the U.S. Department of Transportation over the six-day recovery period following the outage, longer than other major airlines.

Earlier, following criticism from Delta's CEO regarding the computer issues, CrowdStrike had denied the sole responsibility for the flight disruptions that impacted Delta, strongly refuting any claims of negligence or misconduct.