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LOS ANGELES (BLOOMBERG) – The Walt Disney Company is slashing 28,000 workers at its U.S. resort business, marking one of the deepest reductions in the workforce of the Covid-19 era.
The belt-tightening measure affects the company’s theme parks, cruise ships and retail businesses, Disney said on Tuesday (September 29). That includes executives and salaried employees, although 67 percent of those laid off are part-time workers. Disney offers benefits to workers, including 90 days of job placement services.
The cuts shook investors, who slid shares nearly 2 percent in late trading Tuesday. The stock was already down 13 percent this year.
It is the latest sign that travel and other experiences will take time to recover from the pandemic. Disney joins airlines and other companies that rely on travel to reduce their workforce. American Airlines Group has warned that it could lay off 19,000 employees, while United Airlines Holdings plans to cut about 12,000.
Disney’s move also highlights its problems with California, which has been slower than other areas to remove restrictions on theme parks.
The company’s national parks employed more than 100,000 before the pandemic, but that doesn’t include cruise lines and other divisions. Its workforce amounted to 223,000 at the end of the last fiscal year, which ended in September 2019.
“As heartbreaking as it may be to take this action, this is the only feasible option we have in light of the prolonged impact of Covid-19 on our business,” Josh D’Amaro, president of the parks division, said in a memo to workers.
The Covid-19 crisis closed Disney parks around the world. Although resorts in other areas have reopened, including Florida, in July, Disney has not yet received authorization to restart operations at its two theme parks in Anaheim, California.
D’Amaro said Disney had tried to hold out as long as possible before making the cuts permanent, but after seven months with some attractions still closed, Disney couldn’t wait any longer.
LESS CAPACITY
Even those that have reopened, like the four theme parks in Florida, are operating at a much lower capacity due to social distancing requirements. The number of visitors, particularly those arriving by air, has been disappointing, the company said.
Disney has also been adopting more technology in response to the pandemic, allowing visitors to move around the parks with fewer human interactions. The changes include online restaurant menus and mobile payment systems. Some of those new approaches require fewer employees.
“We have cut expenses, suspended capital projects, discharged our cast members while continuing to pay benefits, and modified our operations to run as efficiently as possible,” D’Amaro said. “However, we simply cannot maintain our full staff in a responsible manner while operating at such limited capacity.”
The situation has been made worse in California by the state’s unwillingness to lift its restrictions, D’Amaro said.
Nineteen California lawmakers sent Governor Gavin Newsom a letter Monday urging him to reopen the state’s theme park industry.
“His administration has legitimately relied on data and science, and to date, data and science do not point to theme parks as sources of transmission,” they wrote.
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