Delta Says CrowdStrike Outage Cost Airline $380 Million in Revenue

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

For the current quarter, the Atlanta-based carrier estimated the direct impact on revenue would be about $380 million, which was “primarily due to customer refunds for canceled flights and customer compensation in the form of cash and SkyMiles,” according to Thursday’s regulatory filing.

The airline estimates additional losses of $170 million, mainly due to customer refunds and crew costs. Delta expects fuel costs to be $50 million lower because of the 7,000 flight cancellations over the five-day period.

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“An operational outage of this length and magnitude is unacceptable,” CEO Ed Bastian said in the filing. He also reiterated the carriers’ intention to sue CrowdStrike and Microsoft to “recover damages caused by the outage, which amount to at least $500 million.”

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

Delta, Microsoft and CrowdStrike have found themselves embroiled in a public blame game over the July 19 outage that impacted the economy and forced all major airlines to temporarily suspend operations.

However, while other carriers were able to quickly resume normal operations, Delta was disrupted for nearly a week, prompting a federal government investigation.

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 letter to CrowdStrike Thursday, Delta’s law firm, Boies Schiller Flexner, said the company’s apology was insufficient, especially “when accompanied by false statements and attempts to shift blame to Delta.”

In an initial letter last month, Delta’s law firm said it had “reason to believe that Microsoft failed to comply with contractual requirements” and alleged that the company “otherwise acted in a grossly negligent, if not willful, manner in connection” with the update that caused the outage, according to reports.

Mark Cheffo, Microsoft’s general counsel and co-chair of international litigation firm Dechert, said Microsoft’s software was not the cause of the CrowdStrike incident, but that “Microsoft immediately stepped in and offered to help Delta free of charge.” Microsoft has repeatedly made that offer, but Delta has not accepted its help, Cheffo said.

She also claimed that “Delta, unlike its competitors, has apparently failed to modernize its IT infrastructure, either for the benefit of its customers or for the benefit of its pilots and flight attendants.”

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

Michael Carlinsky, CrowdStrike’s attorney and co-managing partner of Quinn Emanuel Urquhart & Sullivan, also wrote a letter to Delta’s lawyers stating that the carrier was refusing CrowdStrike’s on-site assistance.

Teleprinter	Security	Last	Change	Change %
MSFT	MICROSOFT CORP.	402.69	+4.26	+1.07%
CRWD	CROWDSTRIKE HOLDINGS INC.	241.13	+0.61	+0.25%

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“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 19. CrowdStrike’s Chief Security Officer was in direct contact with Delta’s CISO in the hours following the incident, providing information and offering support,” CrowdStrike said in a statement Friday.

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

CrowdStrike also noted a statement on LinkedIn written by Delta board member David DeWalt saying the company has done “an incredible job.”