The Walt Disney Co. has decided to lay off 28,000 furloughed employees from its California and Florida theme parks due to the financial losses suffered by the company brought on by the coronavirus pandemic.
The Burbank-based company said on Tuesday that it would lay off domestic employees at its parks, experiences and products division, which includes Disneyland Resort and Disney California Adventure Park in Anaheim and Walt Disney World in Orlando, Florida.
The company was forced to close down its two theme parks, Disney World and Anaheim’s Disneyland on government orders in March as COVID-19 cases soared. Disney lost an estimated $500 million for every two weeks the attractions were closed, Chief Financial Officer Christine McCarthy said in May.
Disney World reopened to limited capacity in June, but Disneyland remains closed.
Chairman Josh D’Amaro said that the continuous shutdown of Disneyland was partly to blame for the layoffs. He said the cuts were “necessary” citing the "prolonged impact" of coronavirus on business. That included "limited capacity due to physical distancing requirements and the continued uncertainty regarding the duration of the pandemic."
Roughly two-thirds of the workers who will lose their jobs work part-time. That is almost 67 % of the workforce. The company chairman wrote a letter to all the employees explaining the hard times and why the company was forced to take this unavoidable route.
"Over the past several months, we've been forced to make a number of necessary adjustments to our business," he said. "And as difficult as this decision is today, we believe that the steps we are taking will enable us to emerge a more effective and efficient operation when we return to normal.”
In April, Disney had furloughed more than 100,000 workers after its theme parks were shut down, though it continued to pay the health insurance and other benefits to the employees.
Disney executives have also taken pay cuts of 20%-30%.
While the company's CEO Bob Chapek said he would take a 50% pay cut, company executive chairman Bob Iger said he will forgo all his salary.
The Disney Parks, Experiences and Products segment employs around 177,00 (around 75%) of the company's 223,000 employees.
The company is expected to speak with union leaders representing Disney staffers, known as “cast members,” to determine further steps. The company plans to offer a severance package to some of the laid-off employees. It has also offered to help workers with job placements.
“For the last several months, our management team has worked tirelessly to avoid having to separate anyone from the company,” D’Amaro said. “We’ve cut expenses, suspended capital projects, furloughed our cast members while still paying benefits, and modified our operations to run as efficiently as possible, however, we simply cannot responsibly stay fully staffed while operating at such limited capacity.”
Disney was partially opened in June and an online reservation portal called Disney Park Pass was floated. All hygiene and distancing protocols were followed. Some play areas at Disney World remained closed and others attractions, including restaurants and stores, reopened at reduced capacity.
Disney's parks unit contributed $26 billion in fiscal 2019, but the second quarter of this year saw its operating profit fall by almost 58 per cent compared with the previous year.
In March, Disney reported a loss of billion dollars in profit, just as news of the coronavirus broke. The company’s profit dropped 91 per cent during the first three months of 2020.