Virgin to chase $20m in outage losses

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Virgin to chase $20m in outage losses

Legal action against suppliers on the cards?

Budget airline Virgin Blue has told investors today it is “actively pursuing all avenues” to recover an estimated $15-$20 million of losses caused by an eleven day period of IT outages.

The airline today confirmed that problems with its Navitaire check-in system, hosted by Accenture, caused some 11 days of service interruptions and downtime since late September.

The airline’s operations ground to a halt on Sunday September 26 and it has since suffered intermittent service interruptions and had to take its systems offline for maintenance as a result of the outage.

The airline said that systems were restored to the “normal production environment” on Wednesday, October 6.

“An initial assessment of this interruption shows an estimated pre tax profit impact of $15-20 million,” the airline said today in a statement posted to the Australian Stock Exchange.

“Virgin Blue will be actively pursuing all avenues to recover this cost.”

Mark Vincent, partner at Truman Hoyle lawyers, said the Virgin Blue outage represented an example of the kind of technical and contractual due diligence required before entering into any outsourcing agreement.

Vincent said that whilst ICT suppliers offer service level agreements, the remedy in place for breach of a service level was "rarely going to cover the cost of a service not being available.

"It's not an insurance policy for all risks on your business," he said.

"So the due diligence [required] is more than just looking at what is promised in the contract, but looking behind at the technical solution, at making sure there is adequate disaster recovery processes are in place, that those disaster recovery processes are tested regularly, and that the service is likely to meet your needs."

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