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Disney to furlough employees amid coronavirus crisis

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Walt Disney Co. on Thursday said it would begin to furlough employees “whose jobs aren’t necessary at this time” amid widespread business closures, in the latest sign of the harsh economic fallout from global coronavirus crisis.

The Burbank-based entertainment giant has been devastated by the COVID-19 pandemic, which has shuttered its theme parks, cruise lines and retail stores, halted film and TV productions and delayed high-profile movie releases including “Mulan.”

The furloughing process will begin April 19.

Disney, which employs 223,000 people according to its annual report, and is one of the biggest employers in the Los Angeles area, did not say how many people would be out of work because of the decision. The company also did not specify which departments would be affected.

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Disney representatives did not immediately respond to requests for comment.

However, the impact is expected to be significant. Disney’s parks and resorts employ more than 170,000 people, alone, many of whom are part time.

Last week, the company said Disneyland in Anaheim and Walt Disney World Resort in Orlando, Fla., will remain closed “until further notice.” Disney’s studios have also been hit by social distancing measures, forcing a pause on productions, including the live-action “The Little Mermaid” and Marvel’s “Shang-Chi and the Legend of the Ten Rings.”

“The COVID-19 pandemic is having a devastating impact on our world with untold suffering and loss, and has required all of us to make sacrifices,” Disney said in a statement. “Over the last few weeks, mandatory decrees from government officials have shut down a majority of our businesses.”

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Disney’s stock has taken a dive due to the coronavirus outbreak that has shuttered parks and delayed major film releases.

Disneyland and Walt Disney World have been shuttered since mid-March, when government officials began issuing stricter orders to slow the spread of the virus, putting thousands of people out of work. So far, though, Disney employees have received full pay and benefits during the closures, the company said. Disney has committed to paying workers through April 18. But the latest decision underscores the uncertainty of the situation for businesses such as Disney.

“[W]ith no clear indication of when we can restart our businesses, we’re forced to make the difficult decision to take the next step and furlough employees whose jobs aren’t necessary at this time,” Disney said.

Those affected by the program will remain Disney employees through the duration of the furlough period, Disney said. The company also promised full healthcare benefits, and will cover the cost of employee premiums.

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Union representatives representing some of Disney’s workers on Thursday said they expect to meet with the company starting Friday to discuss the ramifications of the coronavirus outbreak.

Workers United Local 50 president Chris Duarte, who represents food and beverage workers at Disney’s California parks, said Disney’s Thursday announcement does not include union members, who are covered by collective bargaining agreements. Duarte estimates that about 10,000 non-union workers are employed at Disney’s Anaheim parks.

“We’re going to be talking to [Disney] all day tomorrow and presumably over the weekend to talk about the future of the union members,” Duarte said.

The decision comes just days after Disney said it would cut the salaries of top executives to combat the financial fallout of the health crisis. Executive chairman Bob Iger will forgo his salary, and Chief Executive Bob Chapek’s salary will be cut by 50%, starting April 5.

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The move also comes less than a week after President Trump signed a $2-trillion stimulus package to help workers struggling because of coronavirus-related shut downs. The law expanded who qualifies for unemployment assistance to include people who were furloughed, gig workers and freelancers. The measure provided a $600 increase in jobless benefits for four months, on top of what states provide as base compensation, and extended by 13 weeks the duration of benefits, which is typically 26 weeks.

Virtually all entertainment companies have felt the pain of the pandemic and the resulting restrictions on public gatherings. Disney, though, long a dominant force in Hollywood, is particularly vulnerable because of its reliance on businesses that require people to be together in large groups: theme parks, theatrical films and movie and TV sets. Disney-owned sports network ESPN has suffered from the cancellation of live competitions, including the NBA.

Last month, Disney said it had raised $6 billion in debt as it faced the blow from the virus.

Guggenheim analyst Michael Morris on Thursday downgraded Disney’s stock to “neutral” from “buy,” citing damage from the coronavirus.

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“Disney is a tremendously valuable collection of physical and intellectual property assets and our long-term view of industry-leading value creation potential is unchanged,” Morris wrote in a report. “However, we also believe that investors are under-appreciating how long the parks and resorts business may be under pressure relative to prior expectations.”

Reversing a previous policy, Disney said Thursday that it would temporarily waive the requirement that annual passholders continue to make their monthly payments for their passes while the parks in Anaheim and Orlando remained closed. Disney previously took heavy criticism on social media for requiring that passholder members to continue making their monthly payments.

“Our annual passholders are some of our most loyal guests, and we are available to help them during this incredibly uncertain time,” Disney said in a statement Thursday.

Times staff writers Hugo Martín and Meg James contributed to this report.


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