The tug-of-war between Delta Air Lines (DAL) and CrowdStrike (CRWD) seems to be unending. The duo is involved in a blame game related to the losses caused by multiple days of tech outages and resultant flight cancellations. DAL shares are down 11.5% and CRWD shares have crashed nearly 29% since July 19.
In the latest twist, Delta stated that its Q3 revenues would be negatively impacted by approximately $550 million due to the outage-related damages. Of this, $380 million would go to refund canceled flights and customer compensation, while another $170 million is associated with additional costs related to the tech-led outage and subsequent operational recovery. The outage led to the shutting down of 37,000 Delta computers and 7,000 flight cancellations, impacting 1.3 million customers.
DAL and CRWD React to Allegations
Delta is seeking compensation for the losses from CrowdStrike, while the latter is blaming Delta’s lax procedures for the extended flight delays and cancellations. Delta was not the only airline to suffer delays, but CrowdStrike maintains that Delta executives did not respond to the help offered immediately after the outage. CrowdStrike is calling Delta’s allegations “misleading.” Notably, the U.S. Department of Transportation is probing Delta’s response to the outage.
Delta did acknowledge that it relied heavily on CrowdStrike and Microsoft (MSFT) for its “mission-critical operational stack,” which led to this crisis. The carrier argues that CrowdStrike’s help came days later when it had already begun its own SOS measures. This was indeed one of the largest outages Delta had faced to date. The airline spent days manually managing the flight schedules and returning to normalcy.
CrowdStrike noted that it will not bear all of the losses that Delta suffered since it has a cap on the liability in the contract. Meanwhile, Delta is pushing CrowdStrike to bear the maximum losses, claiming “gross negligence or willful misconduct.”
Is Delta a Buy or Sell?
Despite the chaos, DAL stock commands a Strong Buy consensus rating backed by 11 unanimous Buy ratings on TipRanks. The average Delta Air Lines price target of $63.07 implies 59.2% upside potential from current levels.
Is CrowdStrike a Buy or Sell?
Even CRWD has a Strong Buy consensus rating on TipRanks. This is based on 30 Buys, six Holds, and one Sell rating. The average CrowdStrike price target of $358.75 implies 49.2% upside potential from current levels.
