WEBVTT - Bloomberg's Sasso on Delta's Worldwide Computer Failure (Audio)

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<v Speaker 1>a drop of two tenths of one percent. I'm Charlie Pallett,

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<v Speaker 1>and that's a Bloomberg Business Flash. You're listening to taking

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<v Speaker 1>stocks with pin Box at Kathleen on Bloomberg Radio. Let's

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<v Speaker 1>take stock of the airline industry. If you've been listening

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<v Speaker 1>all week, you know that Delta Airlines computer systems shut

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<v Speaker 1>down on Monday, the airline canceled more than a thousand flights.

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<v Speaker 1>About ninety flights are canceled today. Let's find out more

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<v Speaker 1>about airlines from Michael Sasso, airline reporter for Bloomberg News,

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<v Speaker 1>joining us from Atlanta, Georgia. Michael, thanks very much for

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<v Speaker 1>being with me. Tell us a little bit about the UH,

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<v Speaker 1>the glitch, the problem, the issues related not only to

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<v Speaker 1>UH you not to Delta Airlines, but also I noted

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<v Speaker 1>that July Southwest had a computer outage that it is

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<v Speaker 1>blaming for some of its woes. What's going on with

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<v Speaker 1>the airline computer systems? Right? Yeah, could be here, Um yeah, Delta.

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<v Speaker 1>Delta has has generally had a pretty good run of

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<v Speaker 1>things in the last few years, has kind of been

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<v Speaker 1>relativelyly immune to these computer glitches, but it kind of

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<v Speaker 1>things got caught up to it the other day, and

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<v Speaker 1>so far I think we're over or right around two

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<v Speaker 1>thousand cancelations at Delta over the last three days. So

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<v Speaker 1>that's a big deal to them. Delta prides itself on

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<v Speaker 1>being the most reliable of the major for US airlines,

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<v Speaker 1>so they've really been apologizing like crazy. Their CEOs made

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<v Speaker 1>to video recordings and now apologizing to customers. Uh and

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<v Speaker 1>and yeah, what happened there? They're citing a power failure

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<v Speaker 1>at their big computer data center here in in Atlanta.

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<v Speaker 1>They say that they basically some kind of a transformer

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<v Speaker 1>blue cut power to their computers, and mysteriously their backup

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<v Speaker 1>power also failed, and so they were without power to

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<v Speaker 1>their data center for some period and and that kind

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<v Speaker 1>of fouled up all of their systems, from their flight operations,

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<v Speaker 1>their reservations, to customer service, and it just kind of

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<v Speaker 1>a big mess. And you're right. Sal West Airlines had

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<v Speaker 1>a similar incident just a couple of weeks ago that

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<v Speaker 1>it caused about twenty three hundred cancelations. And so it

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<v Speaker 1>seems to be a recurring problem that that none of

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<v Speaker 1>the airlines can can escape right now. Michael, in a

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<v Speaker 1>recent story on Bloomberg that I recommend about Delta's system failure,

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<v Speaker 1>you spoke with the Bob Edwards, the former chief information

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<v Speaker 1>officer for United Continental Holdings. What did he say about this? Yeah,

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<v Speaker 1>I was really enlightening. I was glad to get in

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<v Speaker 1>touch with him, and he was. He was surprisingly candid.

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<v Speaker 1>He acknowledged that he had a number of issues himself.

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<v Speaker 1>He said he retired, and he acknowledged it was an

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<v Speaker 1>entirely voluntary He retired under pressure. United just had a

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<v Speaker 1>number of problems computer and basically he doesn't know specifically,

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<v Speaker 1>of course, what happened that at Delta, but he generally

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<v Speaker 1>says that this this thing is likely to keep happening,

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<v Speaker 1>not necessarily to Delta, but throughout the industry because it

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<v Speaker 1>is the way he characterized it. The airline industry tends

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<v Speaker 1>to have um kind of older computer equipment. Uh, there's

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<v Speaker 1>a little bit of reticence to upgrade things. Sometimes chief

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<v Speaker 1>financial officers don't want to spend the money that might

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<v Speaker 1>need to upgrade these systems, and and and all of

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<v Speaker 1>these systems are just so interconnected, maybe unlike a factory,

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<v Speaker 1>uh computer system or what. Once one system goes down

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<v Speaker 1>on an airline, you know, a say the flight operations

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<v Speaker 1>that kind of keeps track of aircraft, that will follow

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<v Speaker 1>up the reservations and in all the other systems. So

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<v Speaker 1>they're very interconnected. In the whole industry is very susceptible

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<v Speaker 1>to this kind of thing. Is there any redundancy that

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<v Speaker 1>has been built into these systems? Well, there is. M

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<v Speaker 1>Delta has taken a lot of heat over the last

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<v Speaker 1>few days, people suggesting, you know, why didn't they have

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<v Speaker 1>a redundant system? So why didn't ever redundant power source?

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<v Speaker 1>Why did they have redundant computers? Now, they came out

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<v Speaker 1>very aggressively, I think it was yesterday and said, hey,

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<v Speaker 1>we did have a redundant power source, but for some

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<v Speaker 1>reason it gets very technical that redundant power source, it

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<v Speaker 1>didn't work. And uh so that that's a question. Now.

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<v Speaker 1>What Edwards, the former United ce IO, said was that, um,

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<v Speaker 1>you know, these things Unfortunately, even even the best laid

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<v Speaker 1>plans can can fail. And and even when you have

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<v Speaker 1>a redundant redundancy, it can you know, these a lot

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<v Speaker 1>of things that get fouled up. Michael, is the consolidation

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<v Speaker 1>of the airline industry also a culprit that they're trying

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<v Speaker 1>to meld together a lot of legacy systems while they're

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<v Speaker 1>flying their aircraft twenty four hours a day, seven days

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<v Speaker 1>a week. I think that could be. I think it

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<v Speaker 1>certainly was in United's case. United and Mr Edwards again

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<v Speaker 1>he acknowledged that was a big problem when they pulled

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<v Speaker 1>together United in continental airlines. I mean you had they

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<v Speaker 1>each of them had separate systems and they wind up

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<v Speaker 1>going with believes United System, where uh, some feel like

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<v Speaker 1>they should have gone with Continental System, and he acknowledged

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<v Speaker 1>that that. You know, these things are very complicated and

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<v Speaker 1>when you try to bring together two of these systems,

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<v Speaker 1>you know that there's a lot of room for air Now. Now,

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<v Speaker 1>Delta merged with South I'm sorry, merged with Northwest. I

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<v Speaker 1>believe that was an O seven or oh eight, So

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<v Speaker 1>I mean they had ample time to to merge these things.

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<v Speaker 1>I don't think that was an issue in the recent

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<v Speaker 1>Delta event. Do you see them spending more money on

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<v Speaker 1>these kinds of computer systems. I mean, if you're in

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<v Speaker 1>the I T industry, should you be calling on the

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<v Speaker 1>airlines right now and saying, hey, look, we've got something

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<v Speaker 1>that might be able to help you. Yeah, I would

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<v Speaker 1>probably a good sales call to make right now, I

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<v Speaker 1>do Delta. Delta again came out and uh Bastion their CEO,

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<v Speaker 1>and one of his two recorded messages has said, hey,

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<v Speaker 1>we've spent hundreds of millions of dollars in the last

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<v Speaker 1>three years upgrading our technology. So they're saying they were

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<v Speaker 1>not remiss in doing this. But you know, particularly with

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<v Speaker 1>Delta one, of the things I'm watching is they've got

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<v Speaker 1>so much invested in their reliability and everything about what

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<v Speaker 1>they sell to customers and businesses is we're number one

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<v Speaker 1>in reliability. So you have to think that in some

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<v Speaker 1>back rooin they're plotting out how to keep this from

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<v Speaker 1>ever happening again. Thanks very much, Michael Sasso, airline reporter

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<v Speaker 1>for Bloomberg. Shares of Delta down two percent. This is

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<v Speaker 1>Bloomberg coming up on taking stock. The Bank of England's

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<v Speaker 1>plan is to keep calm and carry on buying is

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<v Speaker 1>coming after the central bank said it will deal with

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<v Speaker 1>a short fall in bond purchases. That's next