Delta Expects $500 Million Hit From CrowdStrike Outage

Delta Air Lines CEO Ed Bastian said the CrowdStrike outage that led it to cancel thousands of flights will cost it $500 million. 

In an interview with CNBC’s “Squawk Box” Wednesday morning, Bastian said the loss was not only in revenue, but also in the millions of dollars in compensation the carrier owed for hotels and other reimbursements. 

When asked if Delta would sue CrowdStrike for the outage, Bastian said, “We have no choice.”

An issue with a CrowdStrike software update caused Microsoft operating systems to crash, leading to tens of thousands of canceled flights worldwide from July 19. However, Delta was one of the hardest hit carriers as it faced a meltdown where it canceled over 5,000 flights over the span of five days. 

Delta’s recovery from the outage was much slower due to a crew scheduling issue. The carrier, which is heavily dependent on Microsoft, said its crew scheduling systems needed the most time to synchronize. As a result, Delta could not get in touch with its crew members for days. 

“We thought we had the best between Microsoft and CrowdStrike,” Bastian said. “We had 40,000 servers we had to retouch and reset.”

Delta Seeks Legal Recourse

Bastian told CNBC that CrowdStrike hadn’t offered Delta anything for the outage. Delta recently hired prominent attorney David Boies, who is chairman of the law firm Boies Schiller Flexner, to represent them in seeking damages from CrowdStrike and Microsoft. Boies is most known for leading the federal government’s landmark antitrust case against Microsoft.

The flight disruptions were unusual for Delta, which prides itself on its reliability and on-time performance. 

The Department of Transportation also opened an investigation into Delta’s response to the meltdown after receiving a high volume of complaints from passengers about the carrier’s customer service. Delta recently offered SkyMiles to those impacted by disruptions. 

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