Delta Air Lines CEO Ed Bastian said Wednesday that the airline will face $500 million in damages related to CrowdStrike’s global outage if it takes legal action.
The airline has been the slowest of any major U.S. airline to recover from a software update problem with a cybersecurity firm that led to the cancellation of more than 2,200 flights on July 19.
Delta ‘lost $500 million in five days’ Bastian told CNBC in an interview in Paris..
Bastian apologized to Delta customers and said the airline, which relies heavily on Microsoft and CrowdStrike technology services, was hardest hit by the outage.
Bastian said the company had to manually reset 40,000 computer systems after the power outage.
“It was a terrible situation,” Bastian said. “We had the heaviest product in the industry. [Microsoft and Crowdstrike]we were the hardest hit in terms of resilience.”
Bastian said the $500 million loss, which was in line with analysts’ forecasts, was due in part to lost revenue but also to “tens of millions of dollars” spent each day on hotel bills and compensation to stranded passengers in the five days after the blackout.
He said Delta will likely seek damages from CrowdStrike as a result of the losses, which one CNBC panelist noted could be enough to bankrupt the cybersecurity company.
“We have no choice,” Bastian said.
“To get priority access to the Delta ecosystem on the technology side, we have to test that stuff. We can’t be in a mission-critical operation that runs 24/7 and say there’s a bug,” he said.
The airline said Tuesday it had hired David Boies, a leading lawyer and chairman of the law firm Boies Schiller Flexner, to seek compensation from CrowdStrike and Microsoft.
A Delta spokesman said CrowdStrike had not offered the airline any financial assistance.
Bastian said the only help they offered after the power outage was free consulting advice.
CrowdStrike is also reportedly facing a class action lawsuit related to the outage from unhappy stakeholders who have seen the company’s stock price plummet by nearly 25% since the glitchy update.
The stock was flat on Wednesday, trading at its lowest this year at $233.
The cybersecurity company allegedly assured investors that its platform was “verified, tested and certified” and failed to disclose that it had not properly tested software updates before rolling them out, according to a federal securities fraud lawsuit filed Tuesday.
suit, Bloomberg Law first reported thealleges that the company failed to inform investors about the risk of a “major outage” and “significant reputational damage and legal risk to CrowdStrike.”
