Disney stops paying 100,000 workers saving company $500million monthly
Walt Disney Corporation has stopped paying 100,000 operational employees after its parks and hotels around the world shut down five weeks ago due to the coronavirus pandemic.
The move from the world’s biggest entertainment company – which has parks in the US, France, China, Hong Kong and Japan – affects half its workforce and now staff in the likes of California and Florida will rely on taxpayer dollars to see them through.
‘With labor accounting for approximately 45 per cent of operating expenses and 33 per cent of total expenses, we assume notable savings,’ JPMorgan’s Alexia Quadrani, who estimated a saving of $500million per month, told the Financial Times.
The company was said to have lost $500million last month after closures.
Disney will reportedly save $500million per month not paying 100,000 staff while their parks and hotels are closed globally. Pictured are cast members in California
Disney operates cruise ships and a streaming service among other products but cast members at the parks have been labelled their ‘top priority’ in the past. ‘With labor accounting for approximately 45 per cent of operating expenses and 33 per cent of total expenses, we assume notable savings,’ Quadrani said
Disney is also understood be losing up to $30million each day and has recently borrowed $6 billion to see it through the uncertain period.
But capital market company analyst, Rich Greenfield, said: ‘They could afford [not furloughing staff].’
Disney Cruise Line – which operates four ships – announced recently that all new departures of the Disney Dream, Disney Fantasy and Disney Magic would be postponed until at least the end of May.
In addition, the Disney Wonder will not be sailing until at least July.
Many of the unpaid parks and hotel staff join the estimated 22 million Americans thrown out of work in four weeks – the worst stretch of US job losses on record.
The Disney furloughs match the number of people now out of work due to pandemic in California alone. Disney has a park in Anaheim.
In California the unemployment rate jumped 1.4 percent to 5.3 percent as of March 15. The leap was the sharpest increase since 1976. But the rate is believed to be about 12.5 percent as Governor Gavin Newsom has said 3.1 million people have filed unemployment since mid-March.
The announcement follows chief executive Bob Chapek saying in March that ‘Our ability to do good in the world starts with our cast members … who create magic every day. Our commitment to them will always be our top priority’.
World Disney World say 58.4 million visitors in 2018 and bosses are making plans for the parks to reopen on the condition that staff and Nabp Exams practice customers undergo temperature checks at the gates.
Previous reports said Disney lost $500million last month since closing five weeks ago. An employee empties a garbage can in Disneyland Park in Anaheim, California
In this March 16, 2020, file photo, the road to the entrance of Walt Disney World has few cars, in Lake Buena Vista, Florida
In the meantime, Disney will continue to cover medical care for unpaid staff.
However from Sunday employees were encouraged to make use of the state payouts which vary around the US. In Florida only $275 per week is available for three months. Disney employs 70,000 performers in Orlando.
The $2trillion package could payout $600 per week for other individuals depending on the state.
By comparison, 17,000 cast members in Paris, France can take advantage of the French government’s payout of up to 84 percent of an individual’s salary.
Former chief executive Bob Iger gave up the remainder of his $3million salary for this year and his replacement Bob Chapek said he’d only take half of his $2.5million base salary, as a show of solidarity.
But the decision to stop paying employees comes as Disney protects a $1.5billion dividend payout due in July.
Executive bonus schemes are also in place and are believed to be worth about 900 times the average $52,000 salary. Iger got $65.6million in incentives in 2018 and $46million in 2019.
Jeff Reitz takes a picture of stormtroopers for his Instagram page in Star Wars: Galaxy’s Edge in Anaheim, CA, on Friday, March 13. In March chief executive Bob Chapek said: ‘Our ability to do good in the world starts with our cast members … who create magic every day. Our commitment to them will always be our top priority’
Executive bonus schemes are also in place and are believed to be worth about 900 times the average $52,000 salary. CEO Bob Chapek’s (left) bonus is expected to be about 300 percent of his salary. Chairman Bob Iger (right) got $65.6million in incentives in 2018
Chapek’s bonus is expected to be about 300 percent of his salary. In addition, he could bring home ‘not less than $15 million’ in long-term incentives.
Iger announced he was stepping down on February 25, with parks chairman Bob Chapek named his successor. But he has retaken the helm to navigate the coronavirus crisis which is estimated to be costing $30 million each day.
The 69-year-old who raked in $47.5 million last year, is looking to build on the tremendous success of Disney’s new streaming service as it postpones the release of forthcoming blockbusters like its Mulan remake.
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Disney Plus has gained 50 million subscribers in five months since its launch. Disney set a target of 60 to 90 million by the end of fiscal 2024.
Disney made 1.4billion in profits in the last quarter of 2019 and $7billion in operating income from its parks, experiences and products all of last year.
The recently-launched Disney Plus has done well as more people seek entertainment at home. The platform has 50,000 subscribers.