Delta Air Lines, Inc. (NYSE:DAL) has disclosed a significant operational disruption due to a system outage caused by CrowdStrike (NASDAQ:CRWD) on July 19, 2024, which led to approximately 7,000 flight cancellations across five days. This information was revealed in a Form 8-K filed with the Securities and Exchange Commission today.
Delta's CEO, Ed Bastian, expressed that the scale and duration of the disruption were unacceptable, and both customers and employees deserved better. The company has since restored its operations to an industry-leading position.
The airline is pursuing legal action against CrowdStrike and Microsoft (NASDAQ:MSFT) to recover damages resulting from the outage, which are estimated to be at least $500 million. For the September quarter, the direct revenue impact is expected to be around $380 million, primarily due to refunds and compensation for customers. Non-fuel expenses related to the outage are estimated at $170 million, mainly from customer reimbursements and crew-related costs. Fuel expenses are projected to be $50 million lower due to the flight cancellations, which have also impacted the projected year-over-year capacity growth for the September quarter 2024 by approximately 1.5 points.
The report clarifies that the information provided is not to be considered filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor is it to be deemed incorporated by reference in any filing under the Securities Act of 1933, except as expressly set forth by specific reference in such a filing.
The forward-looking statements included in the filing are based on estimates, expectations, beliefs, intentions, projections, goals, aspirations, commitments, and strategies for the future. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what is projected.
Such factors include potential accidents, security breaches, reliance on technology, fuel costs, disruptions, labor issues, environmental regulations, and other risks detailed in the company's SEC filings, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
InvestingPro Insights
In light of Delta Air Lines' recent operational challenges, a review of real-time data and InvestingPro Tips provides a broader financial context for the company. Despite the significant disruptions, Delta Air Lines (NYSE:DAL) is trading at a low P/E ratio of 5.56, suggesting that the stock may be undervalued relative to its near-term earnings growth potential. This is further supported by a PEG ratio of just 0.11, indicating that the stock's price is potentially low compared to its expected earnings growth.
Moreover, Delta's status as a prominent player in the Passenger Airlines industry is reflected in its substantial market cap of $25.0 billion and a gross profit margin of 21.84% over the last twelve months as of Q2 2024. However, investors should note the company's recent stock performance, which has seen a 10.07% decline over the past week and a 19.2% drop over the past month.
For those considering an investment in Delta, it's worth noting that the company is expected to be profitable this year, and it has been profitable over the last twelve months. Investors seeking additional insights can find more InvestingPro Tips, including details on the company's shareholder yield and liquidity concerns, on the InvestingPro platform. Currently, there are 11 additional tips available that could help inform investment decisions.
Delta Air Lines is scheduled to report its next earnings on October 10, 2024. As the company navigates through its recent operational hurdles, these InvestingPro metrics and tips offer valuable information for investors assessing the company's financial health and future prospects.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.