Disney To Furlough Employees As Parks Remain Closed Indefinitely

Like many companies that are facing the sobering reality that the coronavirus pandemic and subsequent lockdown may continue for much longer than anticipated or desired, Disney has made some policy changes as the company’s amusement parks continue to remain closed with no foreseeable reopening date in sight.

Disneyland was expected to pay its 35,000 employees roughly $59 million during the unforeseen closure of the Anaheim theme park as a result of the coronavirus outbreak, according to an economic impact study commissioned by Disney.

But without a clear idea of when its parks will be able to reopen, Disney released plans to furlough workers and no longer collect payments for its annual park passes, something that is also occurring with gyms and in other amusement parks across the nation.

“Disney employees have received full pay and benefits during this time, and we’ve committed to paying them through April 18, for a total of five additional weeks of compensation,” the company said in a statement Thursday. “However, with 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.”

During the furlough, non-union employees will continue to receive full health-care benefits, with Disney paying the cost of employee and company premiums. In addition, employees will behave the ability to use their Disney Aspire education programs, the company said, as well as remain eligible for $600 per week in federal compensation through the $2 trillion economic stimulus bill, and state unemployment insurance, according to Disney.

Disneyland resort employees and several thousand more rely on related businesses for their employment, said Cal State Fullerton economics professor Anil Puri, the director of the Woods Center for Economic Analysis and Forecasting.

“Temporary employees will be in worse trouble, especially if the current situation persists and takes a long time to improve,” Puri said via email.

Disney declined to say how many of its 177,000 employees will be affected by Thursday’s announcement.

“This reality has been sobering to all of us,” executives from Disney Parks, Experiences and Products wrote in a letter to staff Thursday. “As difficult as this decision was, we know it was the right one to help protect our cast members, our guests, and our communities.”

The Invesco Dynamic Leisure and Entertainment ETF (PEJ) which has a 6.62% weighting of the entertainment company was done 2.76% Thursday amid the news.

For more market trends, visit  ETF Trends.