The hidden side of politics

Disney said Covid-related costs shaved $2.4 billion from parks’ operating income in latest quarter

Reported by CNBC: 

Views of the Disneyland theme park, still closed due to COVID-19 on July 11, 2020 in Anaheim, California.

AaronP/Bauer-Griffin | GC Images | Getty Images

While the majority of Disney‘s theme parks were open during the company’s fiscal fourth quarter, the continued closure of Disneyland in the U.S. resulted in a big financial hit.

The company expects its California parks will remain closed through the end of this year. The state has said it will not permit theme parks to reopen until coronavirus cases have fallen substantially in the surrounding community. Currently, Covid-19 cases are on the rise.

“Unfortunately, we are extremely disappointed that the state of California continues to keep Disneyland closed despite our proven track record,” CEO Bob Chapek said during a conference call Thursday. “Our health and safety protocols are all science-based and have the support of labor unions representing 99% of our hourly cast members.”

On Thursday, Disney said the Covid-19 outbreak cost its parks, experiences and products segment around $2.4 billion in lost operating income during its most recent period. The segment, which includes its parks, cruise lines, resorts and merchandising, saw revenue fall 61% to $2.6 billion.

In the second quarter, the company had reported it lost $1 billion in operating income due to the pandemic, and in the third quarter, the pandemic cut its operating income by $3.5 billion.

The Walt Disney World Resort in Orlando, Florida, and Disneyland Paris reopened in mid-July and remained open through the end of the quarter. The Paris park did close again in October, but those revenue losses are not reflected in the company’s fourth-quarter results.

Hong Kong Disneyland was open for the first two weeks of the quarter and the last week of the quarter, due to coronavirus restrictions in Asia. During the period, Disney’s cruise line business was closed.

All theme parks in California remain shuttered, as state guidelines prohibit reopening until coronavirus cases in counties fall below 1 per 100,000 — a target that will be difficult to achieve as cases soar throughout the country.

As of Thursday, Orange County, where Disneyland’s two California parks are located, is seeing 5.6 cases per 100,000 people.

The guideline was set by California Gov. Gavin Newsom, who has raised concerns for months over the number of people who frequent theme parks, the duration of time they spend there and the possibility that transmission rates could rise if the parks are reopened.

Chapek would like the state to reconsider these guidelines based on the success it’s had operating its other parks.

“Frankly, as we and other civic leaders have stated before, we believe state leadership should look objectively at what we’ve achieved successfully at our parks around the world, all based on science, as opposed to setting an arbitrary standard that is precluding our cast members from getting back to work while decimating small businesses in the local community,” he said.

With its California parks unable to open, Disney laid off 28,000 workers across the parks division in September. Then earlier this week, the company announced that additional workers at its California theme parks, including executive, salaried and hourly employees, will face furloughs. Disney didn’t disclose the number of affected workers.

Source:CNBC

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