CHICAGO, July 25 (Reuters) - Among the big U.S.
carriers, Delta Air Lines ( DAL ) has assiduously built a
reputation as a premium airline, touting its punctual and
reliable operations relative to peers. But over the last several
days, its brand image has been dented.
Following a global cyber outage, the Atlanta-based airline
has been the slowest among major U.S. carriers to recover. Since
last Friday, Delta has canceled more than 6,000 flights, leaving
hundreds of thousands of travelers stranded. Analysts estimate
the hit to its bottom line could be in the hundreds of millions.
Delta's issues are the latest in a series of unexpected
problems that have hit individual U.S. airlines over the last
few years.
United Airlines bore the brunt of weather
disruptions last year around the July Fourth holiday weekend.
Southwest Airlines ( LUV ) suffered an operational meltdown
around the Christmas holidays in 2022 that upended travel plans
for 2 million customers.
Prior to the cyber outage, Delta's reputation was strong,
with aviation analytics firm Cirium and consultancy OAG ranking
it as the most punctual airline in North America in both 2024
and 2023.
"That (premium) image has now taken a hit," said Conor
Cunningham, an analyst at Melius Research, adding the
disruptions would result in a hit of at least $350 million to
its operating margin in the September quarter.
Citi analyst Stephen Trent said flight cancellations and
delays would reduce Delta's third-quarter and full-year earnings
by 60 cents a share each.
Delta currently expects adjusted profit between $1.70 and
$2.00 per share in the September quarter. The company has not
yet quantified the financial impact of the disruptions and
declined a request for comment.
In an interview last year, Delta CEO Ed Bastian said running
a reliable operation was the central tenet of its strategy to
woo travelers willing to pay for something other than just a
seat.
Delta attributed its problems to a faulty software update by
global cybersecurity firm CrowdStrike, which it said left about
60% of its most critical applications inoperable.
The airline said its crew tracker application, which
ensures all flights have a full crew in the right place at the
right time, required the most time and manual support to
synchronize.
The operational issues have left some of its loyal customers
feeling frustrated and let down.
"For the last decade I've flown first class @Delta for every
single flight," wrote Jason Helmes on social media platform X.
"Never again. Y(ou) all just lost a customer for life."
It took Southwest ( LUV ) about two quarters to recover from the
so-called "bookaway effect" after the December 2022 holiday
meltdown that led a lot of travelers to switch to other
airlines. Some industry analysts say the meltdown's impact
lingered through all of 2023.
In a blog post, Bastian - who flew to the Paris Olympics on
Wednesday where Delta is a U.S. team sponsor - apologized to
customers and said Delta would resume normal operations on
Thursday. But some of its customers are asking how other major
carriers were able to recover far more quickly.
"I think the problem runs deeper," said Scott Spencer,
president at digital engineering services firm Ascendion, who
has been flying with Delta for 25 years. "My understanding is
that Delta's crew scheduling software was down as a result of
increased loads."