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Disney’s Parks Can’t Stand on Pandemic’s Middle Ground

by Bioreports
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Even given its sunny locales, Walt Disney ’s theme-park business looks in for a long winter.

That point was driven home late Tuesday after the family entertainment giant reported plans to lay off about 28,000 workers from the U.S. division of its theme-park segment. That represents nearly 13% of the company’s pre-Covid-19 total workforce of 223,000. The company’s cost savings might be limited, however, given that about two-thirds of the affected number are part-time employees, and nearly all have been on furlough since April. Disney’s stock was down only fractionally at midday Wednesday.

Disney blamed the move in part on the state of California’s reluctance to allow the company’s Disneyland resort to open. But while the state government of Florida has been far more accommodating, the harsh realities of running a major theme park in the midst of a pandemic can’t be ignored. Deutsche Bank analysts, who have been tracking theme-park traffic with geolocation data, wrote in a note last week that attendance at Orlando theme parks is still running about 80% below year-ago levels.

Even Disney’s most rabid fan base can seem to do only so much. Citigroup notes that total air traffic for the Orlando airport in July was down 73% from a year earlier. That is when Disney World reopened at sharply reduced capacity, and with rules for patrons to wear masks in the midsummer Florida heat. At an investment conference earlier this month, Disney Chief Financial Officer Christine McCarthy noted that the summer spike in Covid-19 cases in Florida “had an impact on the visitation that we had expected,” given the reduction in interstate travel.

Wall Street has largely given Disney a pass for the weakness in what was its largest business unit before the pandemic. Disney’s share price is down only 14% so far this year—a far better performance than others who specialize in crowded, in-person entertainment services. Theme-park operators Six Flags , Cedar Fair and SeaWorld have averaged a drop of 47% for the year. Much of Disney’s support stems from excitement over its latest streaming plans, which the company says it will detail further in an analyst meeting sometime this fall.

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