Delta Air Lines Faces $500M Financial Hit As IT Outage Causes Thousands Of Cancellations

Delta Air Lines Inc DAL is about to face significant financial repercussions this quarter due to a recent system failure that resulted in thousands of flight cancellations and triggered a federal investigation into the airline’s response.

Citigroup Inc C reduced its estimates for Delta's third-quarter adjusted earnings by 60 cents per share to $1.37, citing increased operational expenses and potential customer compensation costs, reported Bloomberg.

Analyst Stephen Trent also cut two profit metrics by approximately $500 million each.

The financial setback adds to Delta’s woes as flight disruptions start to subside. Delta CEO Ed Bastian stated on Wednesday cancellations were expected to be minimal, with normal operations resuming by Thursday.

As of 9:30 a.m. in New York, Delta had canceled 168 flights, the fewest since the disruptions began, according to FlightAware.com.

Conor Cunningham of Melius Research estimated a $350 million impact on operating profit and a potential fine from the Department of Transportation, which is investigating Delta’s handling of passengers.

Related Read: Boeing Resumes 737 MAX Deliveries To China After Regulatory Delay: Report

The system failure has also damaged Delta’s reputation for reliable service. Cunningham noted that future bookings might be affected due to the operational issues.

Delta has experienced the most severe impact among U.S. airlines following a Friday outage caused by CrowdStrike Holdings Inc CRWD, which disrupted multiple industries globally.

The outage rendered about 60% of Delta's critical applications, which are based on Microsoft Windows, inoperable.

While other airlines recovered over the weekend, Delta canceled 511 flights on Tuesday, bringing the total to 5,469 cancellations since the breakdown began.

Price Action: DAL shares are trading up 0.046% at $43.63 at last check Wednesday.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo: Courtesy Delta