"We Have No Choice": Delta CEO Prepares Legal Battle Against CrowdStrike After IT Outage Sparked $500M Loss
Update (0822ET):
Delta Air Lines CEO Ed Bastian announced on Wednesday that the global IT outage sparked by CrowdStrike cost the airline $500 million.
Bastian told CNBC's "Squawk Box" on Wednesday that the carrier would seek damages from the disruptions, adding, "We have no choice."
"If you're going to be having access, priority access to the Delta ecosystem in terms of technology, you've got to test the stuff you got. You can't come into a mission critical 24/7 operation and tell us we have a bug," Bastian said.
Bastian added, "We have to protect our shareholders. We have to protect our customers, our employees, for the damage, not just to the cost of it, but to the brand, the reputational damage and the physical channel."
The faulty update from CrowdStrike led the airline to cancel more than 4,000 flights earlier this month.
On Monday evening, CNBC's Phil Lebeau reported that Delta hired top attorney David Boies to sue CrowdStrike and Microsoft for damages.
Shares of CrowdStrike have plunged 40% in recent weeks and have retraced 50% of the move from about $100 handle in early 2023 to nearly $400 at the start of July.
Earlier this week, CNBC's Jim Cramer tried to call a bottom...
As we previously noted, Delta will likely initiate the wave of lawsuits against CrowdStrike by companies that lost millions of dollars during the global IT outage.
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In early premarket trading on Monday, CNBC published a note titled "Jim Cramer calls the bottom in CrowdStrike stock after global IT outage fallout."
By late evening, CNBC's Phil Lebeau reported that Delta Air Lines hired top attorney David Boies to sue CrowdStrike and Microsoft for damages stemming from the global IT outage that sparked nationwide travel disruptions for days.
This report from Lebeau sent CrowdStrike shares lower in the premarket on Tuesday, down about 4.5% to the $247 handle, below Cramer's 'buy—buy—buy' level.
Here's more from CNBC:
While no suit has been filed, Delta plans to seek compensation from Microsoft and CrowdStrike, Lebeau reported. Delta hasn't responded to a request for comment.
The outages cost Delta an estimated $350 million to $500 million. Delta is dealing with over 176,000 refund or reimbursement requests after almost 7,000 flights were canceled.
According to insurer Parametrix, US Fortune 500 companies, excluding Microsoft, are expected to incur $5.4 billion in financial losses due to CrowdStrike's faulty update, which caused the 'blue screen of death' and paralyzed millions of computers in the US and worldwide.
Parametrix wrote last week that insured losses from IT outages in the US will total around $540 million to $1.08 billion for the Fortune 500 companies.
Parametrix CEO Jonatan Hatzor told Reuters that the outage could be one of "the biggest accumulation event we ever saw in cyber insurance, adding, "This event traveled very fast and was very global."
Hatzor said financial losses worldwide could total $15 billion, and global insured losses will be as much as $3 billion.
Will Delta initiate the wave of expected lawsuits from companies severely affected by Microsoft and CrowdStrike's IT outage? If so, this could continue to pressure shares lower.