The Walt Disney Company's Chairman of Parks, Experiences and Products, Josh D'Amaro, announced Tuesday evening that approximately 28,000 employees -- known as "cast members" -- will be laid off across the company's Parks, Experiences and Products segment due to the ongoing impact of the coronavirus pandemic.
Citing "limited capacity due to physical distancing requirements" and the uncertainty of the duration of the pandemic D'Amaro said the company has made "the very difficult decision to begin the process of reducing our workforce."
As recently as Sept. 22, D'Amaro and Disney pleaded for help from the State of California. In making the announcement D'Amaro noted the decision was "exacerbated" by the "State’s unwillingness to lift restrictions that would allow Disneyland to reopen."
California's Health and Human Services Secretary, Dr. Mark Ghaly, told FOX Business that the state's "number one priority is to lead with public health to slow the spread of the virus to begin reopening our economy and get Californians back to work safely and sustainably" and that the state's reopening plan is "driven by science to keep the risk of COVID-19 transmission low."
Ghaly cited the importance of a vaccine to help the state and its businesses. "Without a vaccine it is impossible to eliminate the economic impacts caused by this virus," said Ghaly, "but by taking a measured data- and science-based approach to phasing in and out transmission prevention protocols, we can minimize the health and economic risks that would be caused by opening and shutting repeatedly."
Until a vaccine is approved and produced, Ghaly said "the most important thing all Californians can do to reduce COVID-19 transmission is masking, keeping physical distance and avoiding mixing when possible.”
Approximately 28,000 domestic employees will be affected, of which D'Amaro said 67% are part-time. The company is "talking with impacted employees as well as to the unions on next steps for union-represented Cast Members."
D'Amaro said that the company believes the move will enable Disney to "emerge a more effective and efficient operation when we return to normal."
"Our Cast Members have always been key to our success, playing a valued and important role in delivering a world-class experience, and we look forward to providing opportunities where we can for them to return," he added.
In a letter D'Amaro wrote to employees, which was obtained by FOX Business, the executive said "a decision of this magnitude is not easy." He noted that the Disney management team "has worked tirelessly to avoid having to separate anyone from the company. 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."
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Disney has taken a major financial hit due to the pandemic, with the closures of its theme parks costing a hefty $3.5 billion during the third quarter. The company posted a loss of $4.84 billion, or $2.61 per share, compared to a profit of 79 cents in the prior-year quarter, with revenue falling 42% to $11.78 billion.
Disneyland was scheduled to reopen on July 17, but the plan was sidelined after a resurgence of coronavirus cases in the state. Disney executives and state officials have yet to determine a new "opening" date for the California theme parks.
Meanwhile, Walt Disney World in Orlando, Florida reopened its theme parks in mid-July with masks, social distancing, mobile ordering, contactless payment and enhanced cleaning procedures in place. In addition, Hong Kong Disneyland reopened to the public for the second time on September 25.
The coronavirus has also prompted Disney to delay upcoming film releases, including Marvel's Black Widow and Steven Spielberg's West Side Story, until 2021.