Delta Air Lines (DAL) is in hot water after a tech outage grounded its operations, with the airline blaming CrowdStrike (CRWD). However, CrowdStrike is pushing back against the blame. The cybersecurity company is saying, “Not so fast,” and this legal tug-of-war could impact the stocks involved.
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CrowdStrike vs. Delta: The Blame Game
CrowdStrike, the cybersecurity firm involved in the recent Delta fiasco, is adamant that it’s not responsible for the airline’s dayslong meltdown. According to CrowdStrike, the airline’s public comments and legal threats have spun a “misleading narrative” about their role.
“Should Delta pursue this path, Delta will have to explain to the public, its shareholders, and ultimately a jury why CrowdStrike took responsibility for its actions—swiftly, transparently, and constructively—while Delta did not,” wrote Michael Carlinsky, an attorney at law firm Quinn Emanuel Urquhart & Sullivan.
Delta’s Financial Fallout
Delta’s Chief Executive Ed Bastian told CNBC that the outage cost the airline around $500 million, including lost revenue and compensation costs. The airline is now planning legal action against CrowdStrike and Microsoft (MSFT), enlisting the help of Boies Schiller Flexner to recover its losses. This ongoing dispute has seen Delta’s stock feel the pressure, with shares dropping by 4.02%.
CrowdStrike’s Legal Stand
CrowdStrike has countered that its liability is contractually limited to “single-digit millions” and highlighted that the outage, affecting 8.5 million devices, also impacted other businesses and organizations. The firm has offered on-site assistance to Delta, which was reportedly declined, and is now demanding Delta preserve documents related to the incident and its IT systems.
Stock Market Reactions
This legal drama could have ripple effects on both stocks. Delta’s stock has already taken a hit due to the financial strain of the outage and the ongoing legal battle. Meanwhile, CrowdStrike’s (CRWD) stock has also seen a drop, with shares decreasing by 2.82% as the company deals with the fallout.
Using the Tipranks Stocks Comparison tool, we can see that both the stocks are deemed a “Strong Buy” from analysts. These ratings may change depending on how the legal situation evolves.
