Delta Air Lines Microsoft CEO Ed Bastian said Wednesday that a massive IT outage earlier this month that left thousands of customers offline will cost the company $500 million.
The figure includes not just lost revenue but also “tens of millions of dollars per day in compensation and hotels” over five days, Bastian said. The amount is roughly in line with analyst estimates. Delta did not disclose how many customers were affected or how many canceled flights.
The airline canceled more than 5,000 flights following the outage, which was caused by a botched CrowdStrike software update and took thousands of Microsoft systems worldwide offline. Bastian said the company had to manually reset 40,000 servers.
After the outage, Delta's platforms that match flight crews to aircraft couldn't keep up with the changes, causing further disruptions.
The case was similar to what Southwest Airlines Customers suffered during the 2022 year-end holidays, highlighting how just one issue among the many technology platforms airlines rely on can cause widespread disruption.
Other airlines recovered more quickly, and Delta’s successive disruptions and customer response have prompted an investigation by the U.S. Department of Transportation. The collapse was rare for an airline that markets itself as a premium carrier with top-ranking U.S. airlines for profitability and on-time performance.
Bastian, speaking from Paris where he traveled last week, told CNBC's “Squawk Box” on Wednesday that the airline would seek compensation for the disruptions, adding: “We have no choice.”
“If you want to have access to the Delta ecosystem in terms of technology, you have to test things. You can’t come into a critical operation 24/7 and tell us there’s a bug,” Bastian said.
Bastian added that CrowdStrike has not yet made any offers to help Delta financially, beyond providing free advice on how to deal with the fallout. CrowdStrike and Microsoft did not immediately respond to requests for comment.
CNBC reported earlier this week that Delta has hired prominent attorney David Boies to seek damages from CrowdStrike and Microsoft. Boies is best known for representing the U.S. government in its landmark antitrust case against Microsoft.
“We have to protect our shareholders. We have to protect our customers and our employees from harm, not just in terms of cost, but also in terms of damage to brand and reputation,” Bastian said.
— CNBC's Phil LeBeau contributed to this report.
