Delta outage took $150 million toll on airline

Delta Air Lines says the August outage that caused the cancellation of more than 2,300 flights took a $150 million toll on the company’s financial performance.

The impact includes $100 million in lost revenue as Atlanta-based Delta disclosed last Friday, along with about $50 million in extra costs. Delta offered $200 travel vouchers to passengers whose flights were canceled or delayed by more than three hours during the outage.

Combined, the hits to revenue and expense will reduce the airline’s pre-tax income by $150 million in the third quarter of the year.

“This has been a challenging quarter, made more challenging by the challenges of the power outage that we had last month,” said Delta’s chief financial officer Paul Jacobson said during a presentation to investors on Wednesday.

He said Delta’s brand loyalty “helps in challenging times like we saw during the power outage. There were customers that forgave us that perhaps in other situations may not have.” Jacobson also said some pilots and flight attendants stopped their vacations short and showed up in their regular clothes to help fly aircraft during the week of operational disruption.

He said the system failure that resulted from the outage “as unfortunate as it was, it becomes a complete tragedy if we don’t use it as a learning experience.”

Although Delta aims to be seen as what executives call a “high quality industrial transportation company,” Jacobson said the airline is “every bit a technology company as well, and the reliability of the system has to match that.”

He said Delta has “begun to outline a plan… to minimize the probability” of such a failure happening again. He said the company will invest over the next couple of years in reliability and cyber-security as part of “an architecture that can stand up with the reliability that we need.”