Several U.S. airlines, including Delta Air Lines (DAL) and United Airlines (UAL), continued to face negative consequences from Friday’s global cyber outage over the weekend. More than 7,200 flights have been canceled since Friday, making it one of the worst weekends for air travel this year.
The cyber outage was caused by a software update from CrowdStrike (CRWD). It led to problems for several Microsoft (MSFT) Windows users, resulting in the dreaded Blue Screen of Death (BSOD) error. Some airports resorted to manual check-in with handwritten boarding passes due to system errors.
Delta Air Lines Hit Hardest
DAL canceled about 3,500 flights on Friday and Saturday, with an additional 1,250 flights canceled on Sunday. Moreover, Delta has not provided any update on the resumption of normal operations and has already canceled an additional 305 flights for Monday.
CEO Ed Bastian attributed the widespread cancellations to the airline’s dependence on Microsoft Windows, which was severely impacted by the outage. This hampered their ability to manage changes in flight crew schedules.
The airline has offered impacted customers compensation in the form of frequent-flier miles, travel vouchers, and reimbursements for some stranded passengers. However, this disruption has put a dent in Delta’s reputation for reliability and customer service.
Airlines Unevenly Affected
Apart from Delta, other carriers have witnessed little impact from the global IT outage. United Airlines, the second most affected company, on Sunday canceled about 5.5% of its operations. Meanwhile, American Airlines (AAL) saw cancellations on Friday but recovered quickly, with only a few weekend flights grounded.
On the brighter side, Southwest Airlines (LUV), which faced major disruption last year, escaped relatively unimpacted.
Which Airline Stock Is the Best Buy?
The airline companies, especially Delta, face the challenge of recovering from this major disruption and potentially rebuilding customer trust. Importantly, this weekend’s travel nightmare raises questions about the reliance on specific software and the need for robust contingency plans in the aviation industry.
Among the above-mentioned four airline stocks, both DAL and UAL have a Strong Buy consensus rating, while AAL stock has a Moderate Buy rating and LUV has a Hold. Regarding future price performance, analysts expect an upside potential of over 35% in DAL, UAL, and AAL stocks.
