Atlanta-based 
Delta Air Lines
disclosed just how much its third-quarter earnings were affected by its operational meltdown in July. The US legacy carrier is now projecting that its revenue for the quarter could be down by as much as 4% after a CrowdStrike outage
led to the cancelation of more than 7,000 flights
.
It comes as the two parties are battling over who was responsible for the major disruption. Despite reportedly losing $500 million from the summer nightmare, Delta does not expect its full-year earnings per share to be severely affected.
A hit to Q3
In an update to investors on Thursday, the airline said its projected revenue will be flat or up no more than one percent for Q3 – down from between two and four percent that was previously forecast, according to MarketWatch. Its capacity is now expected to be lower than anticipated, but the cost per seat mile (CASM) is predicted to be higher.
Photo: Darryl Brooks | Shutterstock
Delta explained that its 45-cent hit to its earnings was disclosed last month. However, it believes its revenue this month will exceed initial guidance.
“On August 8th, Delta disclosed the financial impact of the technology-driven outage, resulting in a 45-cent impact to September quarter earnings per share. Excluding this, September quarter earnings per share is expected to be at the high-end of initial guidance…”
Drivers of its performance
The airline cited capacity and revenue growth, which is expected to match its original guidance. Lower fuel prices
are forecast “to result in a realized fuel price per gallon that is slightly below the initial guidance range” between $2.60 and $2.80, while non-fuel unit cost growth is expected to be slightly above initial guidance.
Increased weather disruptions in July and August placed its performance “at the high-end of the 1% to 2% outlook.” The airline took a further 0.5-point impact from rewarding its employees with flight passes.
According to Quartz, Ed Bastian, Delta’s CEO, explained last month to CNBC that the carrier could not avoid losing money because it did everything it could to accommodate passengers
affected by the cyber outage.
“We have no choice, between not just the lost revenue, but the tens of millions of dollars per day in compensation and hotels. We did everything we could to take care of our customers over that period.”
Photo: Jon Tetzlaff | Shutterstock
Delta’s non-operating expenses, however, are lower than previously expected thanks to a $70 million gain from its sale of a 50% stake in CLEAR Secure Inc., which was disclosed in August. Additionally, when excluding the losses, the airline is expecting its full-year earnings to match or exceed its guidance at the midpoint.
“Full year 2024 earnings per share is expected to be at or above the mid point of guidance of $6 to $7, excluding the 45-cent impact from the IT outage on September quarter earnings per share,” the airline said.
Rejecting the allegations
Delta is seeking damages from CrowdStrike after notably taking much longer than other airlines to get back on its feet
. In a legal letter obtained by Quartz, the technology company apologized to Delta, but also maintained that the carrier’s meltdown was not entirely its fault.
“CrowdStrike reiterates its apology to Delta, its employees, and its customers, and is empathetic to the circumstances they faced. However, CrowdStrike is highly disappointed by Delta’s suggestion that CrowdStrike acted inappropriately and strongly rejects any allegation that it was grossly negligent or committed willful misconduct with respect to the Channel File 291 incident.”