Walt Disney Co (NYSE:DIS) can no longer bare the disruptions triggered by the COVID-19 pandemic. The theme park giant is to lay off 28,000 employees, mostly at its U.S theme parks. Activity at the parks has dropped significantly on traffic dropping to all-time lows, due to the country’s social distancing policies.
The company was forced to shut down all the theme parks early in the year to curb the virus’s spread. While all the parks in the U.S have been opened on the easing of coronavirus restrictions, Disneyland in California remains closed. Despite the openings, business activity is yet to pick pace to pre-corona levels amid subdued traffic.
Disney has been hit hard by the limited number of visitors allowed at its theme parks. The chairman of theme parks, Josh DAmaro, in a press release, insists the cuts are necessary given the prolonged impact of the covid-19 pandemic on the business. Due to social distancing policies and uncertainty regarding the pandemic all but makes it impossible to maintain the huge workforce.
The lay-offs will mostly affect domestic employees, of which 67% are part time. The cuts will not affect parks in China, Hong Kong, and Paris, France. The company’s parks and resorts employ more than 100,000 people in the U.S alone.
The company lost close to $4.7 billion in the three months ended June 27, 2020, as revenues in the parks and experiences and products dropped 85%. The company’s bottom line took a blow as profits shrunk 91% in the first three months of the year. The parks brought more than $26 billion in 2019x
Revenue streams also took a significant hit on authorities in California, refusing to lift restrictions that would allow the company to open the Disneyland Theme Park. The company is currently engaged in talks with authorities as it seeks to open one of its most important parks.
The theme park chair expects Disney to emerge stronger with more effective and efficient operations ones things return to normal after the pandemic.
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