“Delta Air Lines Rejects On-Site Help from CrowdStrike During Major Outage, Sparks Legal Dispute”
CrowdStrike announced on Sunday that Delta Air Lines had declined on-site assistance during last month’s major outage, which led to thousands of flight cancellations.
CrowdStrike
Delta CEO Ed Bastian revealed last week on CNBC’s “Squawk Box” that the disruptions, occurring during one of the peak travel periods of the year, cost the airline approximately $500 million, including customer compensation. He indicated that the airline has “no choice” but to pursue damages.
On Friday, Bastian informed staff that Delta had notified CrowdStrike and Microsoft of its intention to pursue legal claims to recover the financial losses from the outage and had engaged the law firm Boies Schiller Flexner.
In response, Michael Carlinsky, CrowdStrike’s attorney and co-managing partner at Quinn Emanuel Urquhart & Sullivan, sent a letter to Delta’s lawyer David Boies on Sunday. The letter argued that Delta’s legal threats had created a misleading narrative, implying that CrowdStrike was responsible for Delta’s IT decisions and outage response.
Carlinsky noted that CrowdStrike CEO George Kurtz had offered on-site help to Bastian but did not receive a response.
Delta canceled over 5,000 flights between the July 19 outage, caused by a failed software update, and July 25, surpassing its competitors in cancellations.
CrowdStrike’s stock has dropped more than 36% since the outages, which impacted numerous industries, including banking, healthcare, and air travel.
Carlinsky’s letter stated that if Delta proceeds with legal action, it will need to explain to the public, shareholders, and a jury why CrowdStrike acted swiftly and transparently while Delta did not. Delta will also need to preserve documents related to its IT infrastructure, business continuity plans, and past outage management.
CrowdStrike’s contractual liability is capped in the single-digit millions, according to the letter. Delta did not respond to the letter on Sunday evening, but Crowd expressed hope that Delta would work collaboratively to resolve the issue.
“We did everything we could to take care of our customers during that period,” Bastian said on CNBC’s “Squawk Box” on Wednesday. “If you’re going to have priority access to the Delta technology ecosystem, you need to test it thoroughly. You can’t come into a mission-critical operation and claim there’s a bug without proper testing.”
Crowd has pledged to release future software updates in stages, as outlined in a preliminary post-incident report.
On July 30, Crowd shareholders filed a lawsuit in a Texas federal court seeking damages for investment losses.
Crowd is scheduled to report its fiscal second-quarter results on August 28.
A Microsoft spokesperson did not immediately respond to CNBC’s request for comment.
