Delta Airlines has reported the first financial impacts of it’s widely known IT outage last month which inconvenienced thousands of travelers and took the airline days to get back on its feet.
Figures reached 100 Million USD in revenue over the course of the outage until all system were back on track which does not include costs for compensation, accommodations for stranded passengers etc.
The Delta outage was one of the worst in recent history when it comes to damages inflicted on airlines operations by faulty IT systems or infrastructure.
You can read more details at The Star Tribune (access here).
Delta Air Lines reported Friday a $100 million hit to its revenue caused by the system outage last month.
The Atlanta-based airline canceled about 2,300 flights in the wake of a power failure on Aug. 8 that was caused by misconfigurations of a backup power supply for its servers. About 300 of the airline’s 7,000 servers weren’t properly connected to the backup energy source.
The company announced the effects in a performance report it routinely issues at the start of a month.
Revenue is just one portion of the financial impact an outage can cause for an airline. Delta also incurred what will likely be hefty costs for the travel vouchers, overtime pay, hotel accommodations and more. The airline will likely report those expenses in its third-quarter results in October.
For Delta, $100 million is about 1 percent of its quarterly revenue, which was $10.4 billion in the second quarter and $9.3 billion in the first quarter of 2016.
For sure the way Delta calculated this loss has been on the conservative side but then again you never know. Loss of revenue could be based on many different factors such as having to re-accommodate passengers on other airlines or the inability to sell tickets. That doesn’t mean however that if a passenger isn’t able to buy his or her ticket on Monday he won’t just try it again on Thursday, especially if the customer cares about flying on Delta.
Despite the massive disruption the outage caused and the three days it took the airline to get back to normal, Delta’s main line completed 98 percent of all its scheduled flights last month. The company doesn’t report the on-time performance of its regional affiliates, separate firms that operate short-distance flights under the Delta Connection moniker. …
“We are grateful to our customers for continuing to rely on Delta for the superior customer service and operational performance you’ve come to expect from us,” said Ed Bastian, chief executive of Delta, in a statement. “Our recovery effort exemplified the hard work and determination of Delta people worldwide, and all 80,000 remain dedicated to regaining your trust.”
Bad things happen to every company now and then but this incident had epic proportions. I’m not an IT expert of any sorts so who knows if the fault responsible for this entire disaster could have been avoided easily had someone been paying more attention to the infrastructure, but nevertheless the airline has overcome the issue and is obviously able to chalk it off without getting into financial troubles.
Delta tried to do the right thing in the immediate aftermath, sending customers $200 USD compensation vouchers and crediting their Diamond members an additional 20,000 miles to their accounts. LoyaltyLobby wrote about the compensation here.
Of course all these gestures come at a cost. With the vouchers, this might be a theoretical cost because across all industries it is well known that by far not all vouchers are ending up being used. $200 Airline vouchers probably have a higher rate of actually being redeemed than some low denomination coupons, but usually these expire a year after date of issue and some people might just forget about them.