Delta could take $500M profit hit after Crowdstrike outage: Wall Street analyst

Delta could take a $500 million hit to its bottom line this quarter because of the global Crowdstrike outage last week, according to a Wall Street analyst.

Stephen Trent, a Citi Research airline analyst, cut his profit forecast for the Atlanta-based airline’s third quarter by more than $500 million because of the meltdown, which has continued to spark flight delays and cancelations this week.

Citigroup cut estimates for Delta’s third-quarter earnings per share by 60 cents a share to $1.37 a share, citing “operational expenses and potential customer compensation costs” incurred during the tech crisis, according to a Bloomberg report .

Conor Cunningham, director of Melius Research, estimated Delta will take a $350 million hit to operating profit, as well as a fine from the Department of Transportation — which launched an investigation into the airline after it canceled more than 5,000 flights during the Crowdstrike failure.

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“What is more uncertain is the reputational damage Delta’s image may take given the operational issue,” Cunningham said in a note. “It is certainly plausible forward bookings are impacted.”

Delta declined to comment on the expected financial loss.

Flight delays are just starting to wane after the Crowdstrike outage on Friday caused havoc at airports, leaving some passengers stranded.

Delta CEO Ed Bastian said Wednesday that cancellations were expected to be “minimal” throughout the day after Delta had canceled 828 flights — or 21% of the scheduled total — as of 4:15 p.m. EST on Monday , according to data from FlightAware.

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The air carrier had canceled 48 flights, or just 1% of the scheduled total, as of 1:30 p.m. EST on Wednesday, according to FlightAware.

While other airlines resumed normal travel soon after the “blue screens of death” plagued computers Friday, Delta took longer to bounce back — canceling hundreds of flights daily.

Transportation Secretary Pete Buttigieg said on Tuesday the investigation is to “ensure the airline is following the law and taking care of its passengers during continued widespread disruptions.”

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“Our department will leverage the full extent of our investigative and enforcement power to ensure the rights of Delta’s passengers are upheld,” he said.

Delta said it is cooperating with the investigation and “working tirelessly” to care for customers impacted by the widespread flight delays.

The second largest US airline has staked its claim as a premium air carrier – with little to no flight drama and a lower perceived risk of cancellations.

But since Friday, frustrated passengers have watched their flights delay again and again, prompting concerns about a hit to Delta’s shiny reputation.

Delta shares have dipped around 3% since the outage on Friday.

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