Delta estimates CrowdStrike outage cost airline $380M in revenue

Delta Air Lines expects to lose roughly $550 million from issues tied to CrowdStrike’s global outage last month, according to a filing with the Securities and Exchange Commission (SEC). 

For the current quarter, the Atlanta-based carrier estimated the direct revenue impact to be about $380 million, which was “primarily driven by refunding customers for cancelled flights and providing customer compensation in the form of cash and SkyMiles,” according to the Thursday regulatory filing. 

The carrier estimated another $170 million in losses primarily due to customer expense reimbursements and crew-related costs. Delta expects its fuel expense to be $50 million lower due to the 7,000 flight cancellations over the five-day period.

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“An operational disruption of this length and magnitude is unacceptable,” CEO Ed Bastian said in the filing. He also reiterated the carriers’ intent to pursue legal claims against CrowdStrike and Microsoft in an effort “to recover damages caused by the outag. which total at least $500 million.” 

Bastian cited that figure during an appearance on CNBC last month. 

Delta, Microsoft and CrowdStrike, have become embroiled in a public blame game regarding the July 19 outage that rippled through the economy and forced all major airlines to temporarily pause operations. 

However, while other carriers were able to return to normal operations quickly, Delta was thrown off track for nearly a week, prompting an investigation by the federal government. 

Delta blamed CrowdStrike, saying that 60% of its “most critical applications that run the airline” are on Microsoft Windows. 

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In a Thursday letter to CrowdStrike, Delta’s law firm, Boies Schiller Flexner, claimed that the company’s apology was inadequate, especially “when accompanied by misstatements and attempts to shift the blame to Delta.” 

In an initial letter last month, Delta’s law firm said it had “reason to believe Microsoft has failed to comply with contractual requirements” and asserted that the company “otherwise acted in a grossly negligent, indeed willful, manner in connection” with the update that caused the outage, according to reports. 

Microsoft’s legal counsel, Mark Cheffo, co-chair of Dechert’s global litigation practice, said that Microsoft’s software had not caused the CrowdStrike incident but “Microsoft immediately jumped in and offered to assist Delta at no charge.” Microsoft proceeded to do so on multiple occasions but Delta didn’t accept its help, Cheffo said. 

It also claimed that “Delta, unlike its competitors, apparently has not modernized its IT infrastructure, either for the benefit of its customers or for its pilots and flight attendants.”

Delta refuted those claims saying it “has invested billions of dollars in IT capital expenditures, in addition to the billions spent annually in IT operating costs” since 2016.

Michael Carlinsky, a CrowdStrike lawyer and co-managing partner at Quinn Emanuel Urquhart & Sullivan, also wrote a letter to Delta’s lawyers saying the carrier refused onsite assistance from CrowdStrike.

“Delta continues to push a misleading narrative. CrowdStrike CEO George Kurtz called Delta board member David DeWalt within four hours of the incident on July 19th. CrowdStrike’s Chief Security Officer was in direct contact with Delta’s CISO within hours of the incident, providing information and offering support,” CrowdStrike said in a statement on Friday.

“CrowdStrike’s and Delta’s teams worked closely together within hours of the incident, with CrowdStrike providing technical support beyond what was available on the website.” 

CrowdStrike also noted a LinkedIn statement that Delta board member David DeWalt wrote, saying the company has done “an incredible job.”