Delta Air Lines Has Updated Its Q3 Predictions. Why?

Delta Air Lines has updated its Q3 predictions. The airline certainly projects that it did well — all things considered — but it still suffered a bit of a loss on account of the CrowdStrike incident. There are some other predictions that the airline will be making, as well.

Delta Air Lines Will Still Hit Profit Goals Despite CrowdStrike Issue

MarketWatch is reporting that in the wake of the July global CrowdStrike Holdings outage that caused disruptions to airlines and companies, Delta Air Lines anticipates a 45-cent decline in per-share earnings in the third quarter.

Due to the impact of CrowdStrike, the carrier announced on Thursday that it is now forecasting revenue to be flat or up no more than 1% for the quarter rather than up 2% to 4% as originally predicted. It is now anticipating capacity to be lower than originally expected and cost per seat to increase.

After deducting the outage’s 45-cent impact, Delta claimed that as a result of decreased fuel prices, as-anticipated expansion in capacity and revenue, and other factors, earnings are projected to exceed initial projections.

After a faulty update to CrowdStrike’s Falcon antivirus program disrupted millions of Windows-based computers, forcing airlines to cancel flights and refund passengers, Delta Air Lines was left in a mess.

Although the majority of flights resumed operations in a few days, Delta experienced five days of disruptions and had to cancel an excessive number of 7,000 flights. The Atlanta-based business is currently fighting openly with Microsoft and CrowdStrike over who is to blame for the incident and the airline’s damaged brand.

Except for the 45-cent decline in earnings, Delta has a positive outlook for the quarter. Meanwhile, JetBlue Airways, Frontier Group Holdings, and Alaska Air Group all revised their guidance upward due to higher-than-expected revenue and cheaper fuel.

The market on Thursday, Sept. 12, opened with Delta Air Lines shares down 1% at $43.82. Delta is predicted to report its Q3 earnings in October, potentially on Oct. 10, according to Nasdaq.

Could They Recoup Losses?

When a failed software upgrade resulted in a tech breakdown last month that left thousands of customers stranded at airports, Delta Air Lines’ reputation suffered a serious hit.

The cybersecurity company CrowdStrike’s update brought down 8.5 million Microsoft machines, including those used by airlines and other businesses. However, Delta was the most severely affected.

According to Delta CEO Ed Bastian, the five-day service outage cost the airline $500 million in lost revenue from canceled flights, lodging bills, and other consumer compensation, per CNBC.

“If you’re going to be having access, priority access to the Delta ecosystem in terms of technology, you’ve gotta test the stuff,” he said. “You can’t come into a mission-critical 24/7 operation and tell us we have a bug. It doesn’t work.”

U.S. Department of Transportation opened an investigation into Delta Air Lines’ handling of the matter because of the severity of the airline’s cancellations (it canceled around 7,000 flights between July 19 and July 25) and the volume of consumer complaints, Transportation Secretary Pete Buttigieg wrote on X.

According to CNN, Delta considered filing a lawsuit against CrowdStrike after the incident. Bastian said in an interview, “We have no choice. 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.”

The attorney for CrowdStrike retorted that Delta declined the cybersecurity company’s offer of on-site assistance during the disruption.

Michael Carlinsky, the attorney, reportedly wrote to Delta’s legal team, stating that the airline’s threats of legal action “contributed to a misleading narrative that CrowdStrike is responsible for Delta’s IT decisions and response to the outage,” according to CNBC.

Per a CNN study, the majority of Delta Air Lines’ affected passengers are expected to use the airline again, in part because it is a significant player at key hubs around the nation and because many of them are linked to branded credit cards and frequent flyer programs.