Delta Air Lines (NYSE:DAL) has filed a lawsuit against cybersecurity firm CrowdStrike Holdings Inc. (NASDAQ:CRWD) in a Georgia state court, following a global outage in July that led to widespread flight cancellations.
What Happened: The lawsuit, lodged in Fulton County Superior Court, claims that a software update from CrowdStrike was “catastrophic,” causing more than 8.5 million Microsoft Corp.’s (NASDAQ:MSFT) Windows-based computers worldwide to crash.
The disruption on July 19 resulted in flight cancellations globally and impacted sectors such as banking, healthcare, and hospitality.
Delta, a CrowdStrike customer since 2022, alleges the outage led to the cancellation of 7,000 flights over five days. The airline said it affected 1.3 million passengers, costing it over $500 million.
Delta is seeking over $500 million for out-of-pocket losses and unspecified damages for lost profits, legal fees, and reputational harm.
The U.S. Transportation Department has also launched an investigation into the incident.
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Why It Matters: The incident has been described as the “largest IT outage in history,” highlighting the extent of reliance on key technology companies. Microsoft was also impacted, with its cloud services experiencing outages, leading to flight cancellations for several airlines.
Following the incident, Delta Air Lines CEO Ed Bastian publicly criticized Microsoft’s platform as “fragile,” contrasting it with the stability of Apple Inc. Delta has engaged attorney David Boies to pursue damages from both CrowdStrike and Microsoft. The airline expects a direct revenue impact of $380 million for the September quarter due to the operational disruptions.
Price Action: Delta Air Lines’ stock closed 1.2% lower at $54.12 on Friday, according to Benzinga Pro data.
CrowdStrike’s stock fell 1.3% on Friday, closing at $300.62.
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Photo courtesy: Wikimedia
