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 * Cybersecurity


DELTA'S FLIGHT DISRUPTIONS HIT ITS PREMIUM BRAND IMAGE

By Rajesh Kumar Singh
July 25, 20245:02 PM GMT+2Updated 2 days ago
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Delta Airlines passenger jets are pictured outside Terminal C at LaGuardia
Airport in the Queens borough of New York City, New York, U.S., June 1, 2022.
REUTERS/Mike Segar/File Photo Purchase Licensing Rights, opens new tab
CHICAGO, July 25 (Reuters) - Among the big U.S. carriers, Delta Air Lines
(DAL.N), opens new tab has assiduously built a reputation as a premium airline,
touting its punctual and reliable operations relative to peers. But over the
last several days, its brand image has been dented.
Following a global cyber outage, the Atlanta-based airline has been the slowest
among major U.S. carriers to recover. Since last Friday, Delta has canceled more
than 6,000 flights, leaving hundreds of thousands of travelers stranded.
Analysts estimate the hit to its bottom line could be in the hundreds of
millions.
Advertisement · Scroll to continue

Delta's operations recovered on Thursday, with the carrier cancelling just two
flights as of 10:30 AM EST, according to data from FlightAware.
Its disruptions were the latest in a series of unexpected problems that have hit
individual U.S. airlines over the last few years.
United Airlines (UAL.O), opens new tab bore the brunt of weather disruptions
last year around the July Fourth holiday weekend. Southwest Airlines (LUV.N),
opens new tab suffered an operational meltdown around the Christmas holidays in
2022 that upended travel plans for 2 million customers.
Advertisement · Scroll to continue

Prior to the cyber outage, Delta's reputation was strong, with aviation
analytics firm Cirium and consultancy OAG ranking it as the most punctual
airline in North America in both 2024 and 2023.
"That (premium) image has now taken a hit," said Conor Cunningham, an analyst at
Melius Research, adding the disruptions would result in a hit of at least $350
million to its operating margin in the September quarter.

Citi analyst Stephen Trent said flight cancellations and delays would reduce
Delta's third-quarter and full-year earnings by 60 cents a share each.
Delta currently expects adjusted profit between $1.70 and $2.00 per share in the
September quarter. The company has not yet quantified the financial impact of
the disruptions and declined a request for comment.
In an interview last year, Delta CEO Ed Bastian said running a reliable
operation was the central tenet of its strategy to woo travelers willing to pay
for something other than just a seat.

Delta attributed its problems to a faulty software update by global
cybersecurity firm CrowdStrike, which it said left about 60% of its most
critical applications inoperable.
The airline said its crew tracker application, which ensures all flights have a
full crew in the right place at the right time, required the most time and
manual support to synchronize.
The operational issues have left some of its loyal customers feeling frustrated
and let down.

"For the last decade I've flown first class @Delta for every single flight,"
wrote Jason Helmes on social media platform X. "Never again. Y(ou) all just lost
a customer for life."
It took Southwest about two quarters to recover from the so-called "bookaway
effect" after the December 2022 holiday meltdown that led a lot of travelers to
switch to other airlines. Some industry analysts say the meltdown's impact
lingered through all of 2023.
In a blog post, Bastian - who flew to the Paris Olympics on Wednesday where
Delta is a U.S. team sponsor - apologized to customers. The company is giving
affected customers 10,000 frequent flier miles and offering to reimburse their
"reasonable" hotel, meal, or transportation expenses incurred while in transit.
But some customers are asking how other major carriers were able to recover far
more quickly.
"I think the problem runs deeper," said Scott Spencer, president at digital
engineering services firm Ascendion, who has been flying with Delta for 25
years. "My understanding is that Delta's crew scheduling software was down as a
result of increased loads."

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Reporting by Rajesh Kumar Singh; Editing by Jamie Freed and Nick Zieminski

Our Standards: The Thomson Reuters Trust Principles., opens new tab

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