Delta sees $380 million in lost sales from system breakdown

Delta Air Lines Inc. expects $380 million in lost revenue this quarter from the CrowdStrike Holdings Inc. technology outage that forced the carrier to cancel thousands of flights last month.

The sales hit is due primarily to customer refunds and compensation in the form of cash and loyalty miles, the airline said Thursday in a regulatory filing. Delta estimated $170 million in costs to reimburse passengers for expenses and spending related to crews.

Delta, which canceled about 7,000 flights over several days following the July 19 outage, previously said it expected about a $500 million impact and had hired the law firm of prominent attorney David Boies to represent it. The airline on Thursday confirmed that it was pursuing legal claims against CrowdStrike and Microsoft Corp. to recover damages. 

CrowdStrike’s outage caused a “catastrophic shutdown” of more than 8 million computers around the world, including 37,000 at Delta, Boies said in a letter Thursday to the technology company’s attorney. The disruption affected more than 1.3 million customers of the airline, and about 60% of its “mission critical” applications, including backup systems, depend on the Microsoft Windows operating system and CrowdStrike, he said.

The letter continues a back-and-forth among law firms for the three companies as they seek to assign responsibility for the mass disruption caused by the outage.

Earlier this week, CrowdStrike and Microsoft said Delta either turned down or didn’t respond to offers of assistance from the technology firms, including between the chief executives of the companies. CrowdStrike only referred Delta to a publicly available remediation website during the first 65 hours of the outage, Boies’s letter said. He added that an automated solution it offered later introduced a second bug.

CrowdStrike on Thursday disputed Delta’s timeline, saying in a statement that its chief executive contacted David DeWalt, a Delta director who serves on the board’s safety and security committee, within four hours of the incident. The company also said that its chief security officer was in “direct contact” with his Delta counterpart, providing technical support beyond what was on the website. 

DeWalt later posted on LinkedIn that CrowdStrike had done an “incredible job,” CrowdStrike pointed out. The Delta director didn’t immediately respond to a request for comment while the company declined to comment.

The tech company’s attorneys have said “any liability by CrowdStrike is contractually capped at an amount in the single-digit millions.” Microsoft declined to comment.

Delta has said its extended recovery time stemmed from the outage’s effects on an internal system used to process changes to flights and their crews. That left Delta unable to get its aircraft and personnel properly aligned. 

The US Department of Transportation has opened an investigation into Delta’s handling of the breakdown and the airline could face a fine from the agency depending on its conclusions. Southwest Airlines Co. was fined $140 million by DOT in 2023 after a meltdown of its operation in late December 2022 stranded more than 2 million passengers. 

--With assistance from Jake Bleiberg and Dina Bass.

(Updates with Microsoft decline to comment in ninth paragraph.).