On Tuesday, Disney announced the next large-scale layoffs of personnel in its theme parks in the United States because of the conditions of a pandemic. Disneyland in California remains closed due to the disposal of the authorities, and Walt Disney World in Florida and others are working with limited bandwidth.
Shares of The Walt Disney Company (DIS) declined by 2.7% in the non-trading time (at the time of writing) after the company reported that it dismissed 28 thousand employees of its parks.
Shares of Disney dropped by 13.3% since the beginning of the year because of the strike, a global pandemic on its business parks, toy stores and the film industry.
For the third quarter ended 30 June, income for Disney decreased by 42%, losses were exacerbated by the high cost of severance benefits for staff and integration with the Twenty-First Century Fox.
In a letter to employees, Josh D ‘ Amaro, Chairman of the unit “Parks, Experiences and Products”, which includes theme parks and stores brand of toys, said the dismissal was “very difficult” and “heartbreaking” decision, and that the company “hopes to welcome back the cast and staff when you can.”
Disney noted that 67% of staff from 28 thousand to be fired, is hired workers who work part-time, the rest consists of full-time employees, including managers and even executives. The company promised all statutory benefits to dismissed employees.
Earlier in April, Disney has had to lay off 100,000 employees theme parks and resorts, which, according to the Financial Times, was to allow the company to save up to $500 million per month.
Most of the layoffs will likely affect employees of the two iconic American theme parks – Disneyland in Anaheim, California and Walt Disney World in Orlando, Florida, where the pandemic coronavirus had about 32 thousand and 77 thousand, respectively.
Disney California adventure remains the only fully closed since the beginning of quarantine measures in the state due to the disposal of the state Governor Gavin Newsom. All other parks the company has reopened, although the number of visitors is limited to ensure social distancing. Park in Florida with a limited traffic of visitors is in July.
“Over the past several months, our management team has worked tirelessly to not separate anyone from the company. We reduced spending, suspended capital projects, fired our actors, continuing to pay benefits, and changed our activity to work as efficiently as possible, but we just can’t responsibly stay fully stocked [staff], working with such disabilities,” – said in a statement.
From Disney also has parks in Shanghai, Hong Kong, Tokyo and Paris that the announcement of the cuts probably will not affect.
Parks is not the only issue Disney
Amusement parks is the largest business of Disney along with the media business in the past year, the share of parks accounted for 37% of total revenues in the amount of $69,6 billion In the latest third quarter revenue fell by 85% compared with last year.
The pandemic has adversely affected other divisions of Disney earnings, “Media” decreased by 2% to $6.56 billion., studios fell on the whole 55% to $1.74 billion due to delays with the release of the film and partially closed cinemas.
What will happen to the Disney parks next?
According to reports, visitors and journalists who visited the newly opened Disney World in Orlando, the security protocols of the company and compliance with them is simply impressive.
Nonetheless, consumers are understandably wary, moreover the situation is complicated by the economic recession and high unemployment in the United States. Only at the entrance to the Disney Park visitor will have to pay more than $100 per person.
According to the Morning Consult poll, only 26% of the 500 20-39-year-old American consumers stated that they feel comfortable in the amusement Park, the percentage among the 56-74 year old even less and is 16%. To the question about when they think about the visit to Disney parks, 42% of surveyed adults in the U.S. said that it will not happen earlier than six months.
Further increase in the number of morbidity and fall in income of consumers in different countries remain the main obstacles to a return to growth, revenue from Disney parks and income from box office receipts of cinemas.
In such circumstances, a bright moment for Disney is its new streaming business, which the company will do the emphasis. Recently, Disney unveiled its long-awaited remake of “Mulan” to premiere in theaters right in the app Disney + over the pay-per-view at $30.
