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A poorly tested update from CrowdStrike resulted in a melt-down of computer systems at Delta Air Lines last month. Delta’s CEO Ed Bastian indicates that the disruption cost the carrier $500 million and that the company will be seeking legal damages from CrowdStrike. “We have no choice,” Bastian told CNBC. “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 cancelled more than 6,300 flights over a six-day period, impacting more than 500,000 passengers. The US Department of Transportation is now investigating why Delta Air Lines took much longer to recover from the computer outage than other airlines.
As that period was coming to an end, Delta’s CEO traveled to Paris for the Olympics, which has drawn criticism, although by the time he left, the recovery was already underway on the final day of major cancellations. Delta is a major sponsor of the games.
CrowdStrike is now fighting back, with their external legal counsel indicating that their company‘s CEO reached out to Delta’s CEO, who did not return a call. In a letter to Delta, their counsel indicated that any liability by CrowdStrike is contractually capped in the single digit millions of dollars range.
How will a gap this large be settled? The answer is that it is likely to be taken to the courts. CrowdStrike added that if Delta files suit, it will need to answer “why Delta’s competitors, facing similar challenges, all restored operations much faster” and “why Delta turned down free onsite help from CrowdStrike professionals who assisted many other customers to restore operations much more quickly than Delta.”
It will be interesting to see who wins the blame game. Delta is demanding hundreds of millions in compensation, which CrowdStrike clearly does not want to pay, as other airlines recovered more quickly. Time will tell.
