In this flyer photo provided by Walt Disney World Resort, guests stop at Magic Kingdom Park at Walt Disney World Resort in Lake Buena Vista, Florida on July 11, 2020 to take a selfie. July 11, 2020 is the first day of the gradual reopening.
Matt Stroshane | Walt Disney World Resort | Getty Images
Longer closures at Disneys The California-based theme parks and limited participation in the open parks have forced the company to lay off 28,000 employees in the Parks, Experiences and Consumer Products division.
In a memo sent to employees on Tuesday, Josh D’Amaro, park manager at Disney, explained some “tough decisions” the company had to make in the wake of the coronavirus pandemic, including ending his vacation with thousands of employees.
The company’s shares fell less than 2% after Tuesday’s closing bell.
Around 67% of the 28,000 laid-off workers were part-time workers, according to a statement by D’Amaro on Tuesday. The company declined to break down the layoffs by individual parking location.
While Disney’s theme parks in Florida, Paris, Shanghai, Japan and Hong Kong reopened with limited capacity, both California Adventure and Disneyland in Anaheim, California remained closed.
“As you can imagine, a decision of this magnitude is not an easy one,” D’Amaro wrote in the memo to staff received from CNBC. “Over the past few months, our management team has worked tirelessly to keep anyone off the business. We have cut costs, suspended capital projects, put our performers on leave while continuing to pay benefits, and changed our operations to make them as efficient as possible function.” However, as much as possible, we simply cannot responsibly remain fully staffed when working with such limited capacity. “
The parks, experiences and consumer staples segment is an important part of Disney’s business. Last year, it accounted for 37% of the company’s total revenue of $ 69.6 billion.
Disney has been causing bleeding since the outbreak began. In the second quarter, the company posted $ 1 billion in operating income from the closure of its parks, hotels, and cruise lines. In the third quarter, the company posted a steeper loss of $ 3.5 billion.
D’Amaro and his team worked to convince California lawmakers to come up with guidelines on how to reopen parks. Last week the company made available a media update to highlight the success it has seen in its parks in Florida and internationally in Paris, Shanghai and Japan.
The virtual update also showed the updated security measures that are already in place. These guidelines include the requirement of masks, the availability of hygiene stations, mobile online ordering of meals and cashless payments.
Disney’s coronavirus problems were “exacerbated in California by the unwillingness of the state to lift restrictions that would allow Disneyland to reopen,” D’Amaro said.
Governor Gavin Newsom outlined a new four-tier reopening framework in late August to ease restrictions on California businesses depending on the spread of Covid-19 in individual counties.
Orange County, where Disneyland operates, remains in the “substantial” category and theme parks must remain closed, according to the state website. Orange County reports a local positivity rate, or percentage of all tests with positive results, of 3.1% – below the statewide rate of 3.4%.
However, the county reports about 4.4 new Covid-19 cases per 100,000 residents per day, which prevents further reopenings from taking place. Newsom told reporters at a news conference in late August that state officials are “actively” working with Disneyland and other California theme parks.
Read Disney’s memo to the staff:
I am writing this note to you today to share with you some tough decisions we have had to make regarding our Disney parks, experiences and products organization.
Let me start with my belief that the heart and soul of our business are and always will be people. Just like all of you, I love what I do. I also love being around people who see their roles not just as jobs, but as an opportunity to be part of something special, something different and something really magical.
Earlier this year, we had to close our stores around the world in response to the pandemic. Few of us could have imagined the impact the pandemic would have on us – both at work and in everyday life. We initially hoped that this situation would be short-lived and that we would recover quickly and return to normal. Seven months later, we find out that it wasn’t. As a result, we are now being forced to reduce the size of our team in leadership, salary and hourly positions.
As you can imagine, a decision of this magnitude is not an easy one. Over the past few months, our management team has worked tirelessly to ensure that no one has to be separated from the company. We’ve cut expenses, put capital projects on hold, put our performers on leave while we continued to pay benefits, and changed our operations to run as efficiently as possible. However, we simply cannot responsibly remain fully staffed when working with such limited capacity.
As heartbreaking as it is to take this action, it is the only possible option we have given the ongoing impact COVID-19 has on our business, including limited capacity due to physical distancing requirements and ongoing uncertainty about how long the pandemic will last.
Thank you for your commitment, your patience and your understanding in these difficult times. I know these changes will be challenging. It will take us some time to process all of this information and its implications. We will be making appointments with our affected employees and non-union hourly workers in the next few days. In addition, today we will start discussing the next steps with the unions. We encourage you to visit The Hub or the WDI home page for assistance.
For those who will be affected by this decision, I would like to thank you for everything you have done for our company and our guests. While we don’t know when the pandemic will be behind us, we believe in our resilience and hope to welcome the cast members and staff back when we can.
Chairman of Disney Parks, Experiences and Products
– CNBC’s Noah Higgins-Dunn contributed to this report.