Latest / Bloomberg Intelligence / Bloomberg's Sasso on Delta's Worldwide Computer Failure (Audio)

Transcript

Bloomberg's Sasso on Delta's Worldwide Computer Failure (Audio) · Bloomberg Intelligence

• 0:02
  Speaker 1: Global business news twenty four hours a day at Bloomberg
• 0:05
  Speaker 1: dot com, the Radio plus Mobile Act and on your radio.
• 0:09
  Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Headquarters.
• 0:13
  Speaker 1: I'm Charlie Palette. Stocks are falling from a record. Banks
• 0:17
  Speaker 1: and energy producers are retreating. We've got crude oil down
• 0:20
  Speaker 1: two percent now dropping eighty six cents forty one ninety
• 0:24
  Speaker 1: now on West Texas Intermediate crude gold up six ninety
• 0:27
  Speaker 1: then scaming five tenths of one percent. The thirteen of
• 0:30
  Speaker 1: forty nine, the ten year of thirteen thirty seconds yield
• 0:33
  Speaker 1: one point five percent. SMP five hundred indecks down seven
• 0:38
  Speaker 1: points to seventy four, a drop of three tens of
• 0:41
  Speaker 1: one percent, as stacked down twenty three, a drop of
• 0:44
  Speaker 1: four tenths of one percent down, Industrials down forty two,
• 0:48
  Speaker 1: a drop of two tenths of one percent. I'm Charlie Pallett,
• 0:52
  Speaker 1: and that's a Bloomberg Business Flash. You're listening to taking
• 0:57
  Speaker 1: stocks with pin Box at Kathleen on Bloomberg Radio. Let's
• 1:02
  Speaker 1: take stock of the airline industry. If you've been listening
• 1:06
  Speaker 1: all week, you know that Delta Airlines computer systems shut
• 1:09
  Speaker 1: down on Monday, the airline canceled more than a thousand flights.
• 1:13
  Speaker 1: About ninety flights are canceled today. Let's find out more
• 1:17
  Speaker 1: about airlines from Michael Sasso, airline reporter for Bloomberg News,
• 1:21
  Speaker 1: joining us from Atlanta, Georgia. Michael, thanks very much for
• 1:24
  Speaker 1: being with me. Tell us a little bit about the UH,
• 1:27
  Speaker 1: the glitch, the problem, the issues related not only to
• 1:31
  Speaker 1: UH you not to Delta Airlines, but also I noted
• 1:35
  Speaker 1: that July Southwest had a computer outage that it is
• 1:39
  Speaker 1: blaming for some of its woes. What's going on with
• 1:42
  Speaker 1: the airline computer systems? Right? Yeah, could be here, Um yeah, Delta.
• 1:47
  Speaker 1: Delta has has generally had a pretty good run of
• 1:50
  Speaker 1: things in the last few years, has kind of been
• 1:53
  Speaker 1: relativelyly immune to these computer glitches, but it kind of
• 1:57
  Speaker 1: things got caught up to it the other day, and
• 2:00
  Speaker 1: so far I think we're over or right around two
• 2:02
  Speaker 1: thousand cancelations at Delta over the last three days. So
• 2:07
  Speaker 1: that's a big deal to them. Delta prides itself on
• 2:11
  Speaker 1: being the most reliable of the major for US airlines,
• 2:15
  Speaker 1: so they've really been apologizing like crazy. Their CEOs made
• 2:20
  Speaker 1: to video recordings and now apologizing to customers. Uh and
• 2:24
  Speaker 1: and yeah, what happened there? They're citing a power failure
• 2:29
  Speaker 1: at their big computer data center here in in Atlanta.
• 2:33
  Speaker 1: They say that they basically some kind of a transformer
• 2:36
  Speaker 1: blue cut power to their computers, and mysteriously their backup
• 2:41
  Speaker 1: power also failed, and so they were without power to
• 2:45
  Speaker 1: their data center for some period and and that kind
• 2:48
  Speaker 1: of fouled up all of their systems, from their flight operations,
• 2:53
  Speaker 1: their reservations, to customer service, and it just kind of
• 2:57
  Speaker 1: a big mess. And you're right. Sal West Airlines had
• 3:01
  Speaker 1: a similar incident just a couple of weeks ago that
• 3:05
  Speaker 1: it caused about twenty three hundred cancelations. And so it
• 3:08
  Speaker 1: seems to be a recurring problem that that none of
• 3:11
  Speaker 1: the airlines can can escape right now. Michael, in a
• 3:15
  Speaker 1: recent story on Bloomberg that I recommend about Delta's system failure,
• 3:20
  Speaker 1: you spoke with the Bob Edwards, the former chief information
• 3:23
  Speaker 1: officer for United Continental Holdings. What did he say about this? Yeah,
• 3:28
  Speaker 1: I was really enlightening. I was glad to get in
• 3:30
  Speaker 1: touch with him, and he was. He was surprisingly candid.
• 3:33
  Speaker 1: He acknowledged that he had a number of issues himself.
• 3:37
  Speaker 1: He said he retired, and he acknowledged it was an
• 3:40
  Speaker 1: entirely voluntary He retired under pressure. United just had a
• 3:44
  Speaker 1: number of problems computer and basically he doesn't know specifically,
• 3:49
  Speaker 1: of course, what happened that at Delta, but he generally
• 3:52
  Speaker 1: says that this this thing is likely to keep happening,
• 3:56
  Speaker 1: not necessarily to Delta, but throughout the industry because it
• 4:00
  Speaker 1: is the way he characterized it. The airline industry tends
• 4:03
  Speaker 1: to have um kind of older computer equipment. Uh, there's
• 4:09
  Speaker 1: a little bit of reticence to upgrade things. Sometimes chief
• 4:13
  Speaker 1: financial officers don't want to spend the money that might
• 4:16
  Speaker 1: need to upgrade these systems, and and and all of
• 4:20
  Speaker 1: these systems are just so interconnected, maybe unlike a factory,
• 4:25
  Speaker 1: uh computer system or what. Once one system goes down
• 4:29
  Speaker 1: on an airline, you know, a say the flight operations
• 4:32
  Speaker 1: that kind of keeps track of aircraft, that will follow
• 4:36
  Speaker 1: up the reservations and in all the other systems. So
• 4:39
  Speaker 1: they're very interconnected. In the whole industry is very susceptible
• 4:42
  Speaker 1: to this kind of thing. Is there any redundancy that
• 4:45
  Speaker 1: has been built into these systems? Well, there is. M
• 4:49
  Speaker 1: Delta has taken a lot of heat over the last
• 4:51
  Speaker 1: few days, people suggesting, you know, why didn't they have
• 4:56
  Speaker 1: a redundant system? So why didn't ever redundant power source?
• 4:59
  Speaker 1: Why did they have redundant computers? Now, they came out
• 5:02
  Speaker 1: very aggressively, I think it was yesterday and said, hey,
• 5:05
  Speaker 1: we did have a redundant power source, but for some
• 5:08
  Speaker 1: reason it gets very technical that redundant power source, it
• 5:12
  Speaker 1: didn't work. And uh so that that's a question. Now.
• 5:17
  Speaker 1: What Edwards, the former United ce IO, said was that, um,
• 5:22
  Speaker 1: you know, these things Unfortunately, even even the best laid
• 5:26
  Speaker 1: plans can can fail. And and even when you have
• 5:29
  Speaker 1: a redundant redundancy, it can you know, these a lot
• 5:33
  Speaker 1: of things that get fouled up. Michael, is the consolidation
• 5:37
  Speaker 1: of the airline industry also a culprit that they're trying
• 5:41
  Speaker 1: to meld together a lot of legacy systems while they're
• 5:45
  Speaker 1: flying their aircraft twenty four hours a day, seven days
• 5:48
  Speaker 1: a week. I think that could be. I think it
• 5:50
  Speaker 1: certainly was in United's case. United and Mr Edwards again
• 5:55
  Speaker 1: he acknowledged that was a big problem when they pulled
• 5:58
  Speaker 1: together United in continental airlines. I mean you had they
• 6:03
  Speaker 1: each of them had separate systems and they wind up
• 6:06
  Speaker 1: going with believes United System, where uh, some feel like
• 6:11
  Speaker 1: they should have gone with Continental System, and he acknowledged
• 6:15
  Speaker 1: that that. You know, these things are very complicated and
• 6:18
  Speaker 1: when you try to bring together two of these systems,
• 6:22
  Speaker 1: you know that there's a lot of room for air Now. Now,
• 6:25
  Speaker 1: Delta merged with South I'm sorry, merged with Northwest. I
• 6:29
  Speaker 1: believe that was an O seven or oh eight, So
• 6:32
  Speaker 1: I mean they had ample time to to merge these things.
• 6:36
  Speaker 1: I don't think that was an issue in the recent
• 6:38
  Speaker 1: Delta event. Do you see them spending more money on
• 6:42
  Speaker 1: these kinds of computer systems. I mean, if you're in
• 6:44
  Speaker 1: the I T industry, should you be calling on the
• 6:46
  Speaker 1: airlines right now and saying, hey, look, we've got something
• 6:49
  Speaker 1: that might be able to help you. Yeah, I would
• 6:53
  Speaker 1: probably a good sales call to make right now, I
• 6:56
  Speaker 1: do Delta. Delta again came out and uh Bastion their CEO,
• 7:01
  Speaker 1: and one of his two recorded messages has said, hey,
• 7:05
  Speaker 1: we've spent hundreds of millions of dollars in the last
• 7:08
  Speaker 1: three years upgrading our technology. So they're saying they were
• 7:12
  Speaker 1: not remiss in doing this. But you know, particularly with
• 7:15
  Speaker 1: Delta one, of the things I'm watching is they've got
• 7:18
  Speaker 1: so much invested in their reliability and everything about what
• 7:23
  Speaker 1: they sell to customers and businesses is we're number one
• 7:27
  Speaker 1: in reliability. So you have to think that in some
• 7:30
  Speaker 1: back rooin they're plotting out how to keep this from
• 7:33
  Speaker 1: ever happening again. Thanks very much, Michael Sasso, airline reporter
• 7:37
  Speaker 1: for Bloomberg. Shares of Delta down two percent. This is
• 7:42
  Speaker 1: Bloomberg coming up on taking stock. The Bank of England's
• 7:48
  Speaker 1: plan is to keep calm and carry on buying is
• 7:52
  Speaker 1: coming after the central bank said it will deal with
• 7:56
  Speaker 1: a short fall in bond purchases. That's next