Delta Air Lines (DAL) announced on Thursday that it is pursuing legal claims against CrowdStrike and Microsoft (MSFT) after a global outage disrupted travel plans for 1.3 million customers, leading to associated costs of at least $500 million. A software update by CrowdStrike (CRWD) last month caused system issues for Microsoft customers, affecting several airlines, with Delta experiencing prolonged disruptions even as other carriers recovered the next day. The Atlanta-based airline canceled approximately 7,000 flights over five days and is now under investigation by the U.S. Transportation Department.
Delta CEO Ed Bastian stated in an SEC filing that the operational disruption was unacceptable and that customers and employees deserved better. Despite Delta’s claims, both CrowdStrike and Microsoft have denied responsibility for the disruptions. CrowdStrike expressed disappointment at Delta’s allegations, with Delta's legal representative, David Boies, criticizing CrowdStrike’s attempt to deflect blame. The airline maintains that it was not responsible for the faulty software that caused the global system crash.
Market Overview:
- Delta pursues legal claims against CrowdStrike and Microsoft.
- Disruption from cyber outage affects 1.3 million customers.
- Delta faces a $500 million financial impact.
Key Points:
- Delta canceled about 7,000 flights over five days.
- CrowdStrike and Microsoft deny responsibility for disruptions.
- Delta CEO calls the disruption "unacceptable."
Looking Ahead:
- Investigation by the U.S. Transportation Department into the incident.
- Potential legal outcomes from Delta's claims against CrowdStrike and Microsoft.
- Long-term impact on Delta's operational and financial recovery.
The financial repercussions for Delta include an estimated direct revenue impact of $380 million, primarily due to refunds and customer compensation. Additionally, the airline faces $170 million in expenses related to the technology-driven outage and operational recovery, including customer reimbursements and crew-related costs. However, Delta anticipates $50 million in lower fuel costs due to the flight cancellations.
Delta emphasized to U.S. lawmakers that the faulty software update from CrowdStrike impacted more than half of Delta’s computers, including workstations at every airport within its network. As the airline navigates the aftermath of this significant disruption, the industry will be closely watching the legal proceedings and the potential implications for cybersecurity practices in aviation.
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