Disney announced Tuesday that it would lay off 28,000 people across its theme-park division in the U.S., demonstrating the devastating toll the coronavirus has taken on its core business.
About two-thirds of those losing their jobs are part-time employees, the company said.
"As heartbreaking as it is to take this action, this is the only feasible option we have in light of the prolonged impact of covid-19 on our business, including limited capacity due to physical distancing requirements and the continued uncertainty regarding the duration of the pandemic," Josh D'Amaro, chairman of Disney's theme park unit said in a letter to employees.
The company did not reveal what percentage of its workforce that entailed, but it's believed the U.S. theme parks employ about 200,000 people, which would make the layoffs a workforce reduction of 14%.
Disney parks in California remain closed while Florida parks, which reopened in July, have been underperforming.
The company had furloughed 100,000 employees worldwide, many in the theme-parks division, at the height of the lockdowns in the spring. Many were brought back when Disney World reopened this summer.
Theme parks have taken the brunt of the toll as the virus has limited or scuttled public gatherings. In the most recent April-June quarter, Disney's theme-park division had less than a billion dollars in revenue, after taking in nearly $7 billion in the same period in 2019. The division posted a loss of $2 billion over the period.
Business has not significantly picked up since. On an earnings call in August, Bob Chapek, the Disney chief executive who previously ran the theme parks division, acknowledged that its Disney World locations in Central Florida have not seen the traffic executives had hoped for when they reopened in July. The parks, he said, had undergone a "higher-than-expected level of cancellations."
In response the company cut back the parks' hours. Disney World in particular relies on travel from other states. Airlines, however, are preparing to cut 35,000 jobs this week as people ground their travel plans.
In a statement Tuesday, the company partly pointed the finger at California Gov. Gavin Newsom, a Democrat, who has kept bans on large public gatherings in place. The situation, it said, was "exacerbated in California by the State's unwillingness to lift restrictions that would allow Disneyland to reopen."
The comment is an about-face from a perceived coziness between Newsom and the company's leaders, including executive chair Bob Iger, at the start of the pandemic. Newsom for a short time exempted Disneyland from the restrictions and called the parks a "nation-state" in explaining the leniency.
Disney is eager for a California reopening because the parks there do not rely on outside travel nearly as much as its Florida business.
Newsom warned several days ago of another infection surge and said a further lockdown of businesses could be coming if matters do not improve; he also said school reopenings could be affected.
The layoffs arrive as Disney faces challenges on other fronts.
The company last week moved all major films out of the 2020 calendar, with the earliest rescheduled for May. The film studio has not seen significant layoffs yet.
In the meantime, the company has been trying to stir up revenue elsewhere. On Tuesday and today, it was scheduling press calls to promote its new shows, which begin airing next month. Among the first batches to resume production, after a coronavirus hiatus that stretched from the spring into the summer, the new programming, the company hopes, will draw more advertising dollars.
Disney's parks in other countries, including France and China, remain open, with the latter seeing an increase in capacity in recent weeks.
The news also comes at a tense moment for the U.S. economy.
The jobs market has been rebounding since its nadir in the spring, but concerns continue to grow about the potential for a second contraction. Economists have been warning for months about the damage yet to come from both the continuing march of the virus and the expiration of the generous government benefits that helped support families and companies earlier in the pandemic.
The September unemployment rate, 8.4% in August, will be released on Friday. The leisure and hospitality sector has been one of the most hard hit during the pandemic, with employment down more than 20% in August compared to the same month in 2019.
Information for this article was contributed by Eli Rosenberg of The Washington Post.