Global IT outage: Delta blames CrowdStrike, Microsoft for $500M loss
What's the story
Delta Air Lines is grappling with a significant financial setback, following a worldwide tech outage in July.
The company's CEO, Ed Bastian, revealed that the fallout from this incident has resulted in an estimated loss of $500 million.
The disruption, which left thousands of passengers stranded across the globe, was triggered by a flawed software update from cybersecurity firm CrowdStrike.
Flight cancellations
Tech outage forced Delta to cancel over 5,000 flights
The faulty update from CrowdStrike led to a widespread shutdown of Microsoft systems around the world.
This forced Delta Air Lines to cancel more than 5,000 flights and manually reboot approximately 40,000 servers.
Bastian disclosed that the $500 million loss includes not only lost revenue but also "the tens of millions of dollars per day in compensation and hotels" paid to its customers over a five-day period.
Operational impact
Tech outage highlights vulnerability of airline operations
The tech outage also disrupted Delta's systems that assign flight crews to aircraft, leading to further complications.
This incident underscores how a single technological glitch can cause widespread disruptions in airline operations.
The US Department of Transportation has initiated an investigation into Delta's response time and customer service during this period, including reports of unaccompanied minors left stranded at airports.
Legal action
Delta seeks damages for disruptions caused by tech outage
Bastian has confirmed that Delta will seek damages for the disruptions caused by the tech outage.
"We have no choice," he told CNBC.
"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."
The airline has engaged prominent attorney David Boies to pursue damages from both CrowdStrike and Microsoft.
Preventive steps
CrowdStrike outlines measures to prevent future tech outages
In response to the incident, CrowdStrike has outlined several measures to prevent such problems in the future.
These include staggering the rollout of updates, giving customers more control over when and where they occur, and providing more details about planned updates.
So far, CrowdStrike has not offered any financial assistance to Delta beyond free consulting advice on managing the fallout from the outage.