Delta Air Lines Inc. Chief Executive Ed Bastian has put a price tag on CrowdStrike Inc.’s debilitating outage to his airline, $500 million, leaving the company “no choice” but to seek damages from five days of disruptions.
“They haven’t offered us anything” but free consulting, Bastian told CNBC’s Squawk Box on Wednesday. “We have no choice. We have to protect our shareholders, we have to protect our customers (and) our employees for the damage, not just the cost but the reputational damage.”
Delta has yet to file a lawsuit against either CrowdStrike or Microsoft Corp., but CNN reported the airline has hired the law firm of high-powered attorney David Boies to pursue compensation from the two companies.
Microsoft had no comment on Wednesday.
A CrowdStrike spokesperson said, “We are aware of the reporting, but have no knowledge of a lawsuit and have no further comment.”
CrowdStrike shareholders aren’t waiting. They sued the cybersecurity company on Thursday, accusing it of making “false and misleading” statements about its software testing. CrowdStrike’s stock plummeted 32% nearly two weeks after the incident, shaving $25 billion in the market. And more lawsuits could start flying, says Daniel Newman, CEO of The Futurum Group.
CrowdStrike denied the allegations of shareholders and vowed to contest the lawsuit. The company ended its most recent fiscal quarter with $3.7 billion in cash, $750 million in revolving credit lines, and insurance policies designed to mitigate the potential impact of any legal claims.
For Delta, whose stock is down 9% over the past month, the damages illustrate the devastating ripple effect on an interconnected digital economy. Airlines were among several industries that went offline, including banks, healthcare facilities, online shopping sites and media companies. Fortune 500 companies in the U.S., excluding Microsoft, could lose $5.4 billion from the outage, according to insurer Parametrix. Global insured losses are being pegged at $15.3 billion.
“The CrowdStrike outage is an example of what happens when platformization, or platform consolidation, fights back. There is a dangerous resiliency problem for enterprises and critical infrastructure teams that will only worsen as IT consolidation increases,” Tim Eades, CEO and co-founder at Anetac, said in an email message. “Enterprises need to test, test and test again and only deploy critical patches after testing. They cannot rely solely on that of the platform players.”
The incident is particularly galling for Bastian, who has made it a personal mission to automate Delta and the airports it serves. It has also rankled customers of the airline, which prides itself for its customer service. Delta’s cascading technical disruptions and angry customer reaction sparked an investigation by the Department of Transportation.
“If you’re going to have priority access to the Delta ecosystem in terms of technology, you’ve got to test this stuff,” Bastian said. “You can’t come into a mission-critical 24/7 operation and tell us we have a bug. It doesn’t work.”
The botched software update forced Delta to cancel more than 6,000 flights — or as many as it had in 2019 — over five days. Delta had to manually reset 40,000 servers, Bastian said, to reboot its crucial crew tracking system so it could find pilots and flight attendants to fly its fleet.
The resulting delays left about 500,000 Delta passengers stranded and required days for them to rebook flights and recover checked bags.
