Delta Air Lines will take a $500 million hit related to the CrowdStrike global outage as the airline pursues legal action, the company’s CEO Ed Bastian said Wednesday.
The airline has been the slowest among major US carriers to recover following the cybersecurity firm software update debacle that led to more than 2,200 flight cancellations on July 19.
Delta lost “half a billion dollars in five days,” Bastian told CNBC during an interview in Paris.
Bastian apologized to Delta customers and said the airline, which relies heavily on Microsoft and CrowdStrike’s technology services, took the hardest hit from the outage.
The company had to manually reset 40,000 computer systems after the outage, Bastian said.
“It was terrible,” Bastian said. “We are by far the heaviest in the industry with both [Microsoft and CrowdStrike], and so we got hit the hardest in terms of the recovery ability.”
Bastian said the $500 million loss, which fell in line with analysts’ estimates, was due in part to revenue losses but also the “tens of millions of dollars” spent per day on hotels and compensation for stranded passengers during the five days following the outage.
He said Delta would be seeking damages from CrowdStrike as a result of the losses — damages that one CNBC panelist pointed out could be enough to wipe out the cybersecurity company.
“We have no choice,” Bastian said.
“If you’re going to be having access, priority access to the Delta ecosystem in terms of technology, you’ve got to test the stuff. You can’t come into a mission-critical 24/7 operation and tell us we have a bug,” he said.
The airline announced Tuesday it had hired high-powered lawyer David Boies, chairman of Boies Schiller Flexner, to seek compensation from CrowdStrike and Microsoft.
The Delta boss said CrowdStrike has made no offers to help the airline financially.
The only help it has offered is free consulting advice in the wake of the outage, Bastian said.
CrowdStrike is also reportedly facing a class-action lawsuit related to the outage from disgruntled stakeholders, who have seen the company’s shares plunge nearly 25% since the faulty update.
Shares were flat Wednesday, trading at $233, the lowest this year.
The cybersecurity company allegedly assured investors its platform was “validated, tested, and certified” and failed to disclose that it was not properly testing software updates before rollouts, according to the federal securities fraud suit filed Tuesday.
The suit, first reported by Bloomberg Law, alleges the company failed to notify investors of the risk of “major outages” and “substantial reputational harm and legal risk to CrowdStrike.”
