The Disney parks are currently closed until further notice and these closures have had major financial implications for the Walt Disney Company and its employees.
Recently, Disney Parks moved to furlough all non-essential employees for an indeterminate amount of time. Now, we have a much clearer picture of just how much the Walt Disney Company will save each month now that employee pay is suspended.
According to Financial Times, with the furlough of over 100,000 employees, Disney is set to save up to $500 million each month.
As Disney continues to provide full healthcare benefits for staff on unpaid leave, Cast Members will have to look to state unemployment benefits and federal stimulus funding for their income. In Florida, current unemployment maxes out at $275 per week, some of the lowest rates in the U.S., making this time difficult for many Cast Members.
While Disney seems to see a need for help, they have raised debt and signed new credit facilities resulting in billions of dollars. Some analysts suggest that the furloughs were unnecessary for such a lucrative company. Rich Greenfield, an analyst at BTIG, says, “They could afford [not furloughing staff].”
On the other hand, Greenfield also noted that Disney is looking to brace for a “very prolonged shutdown.” Half of Disney’s operating profits come from the Disney parks with the sector bringing in $7 billion in operating income last year. Not only is the company taking a hit to income from the parks, but Disney stocks have been volatile as shareholders worry about the next few months.
Still, Disney Cast Members aren’t the only ones taking a pay cut. Executives are seeing a reduction in salary and Bob Iger has even elected to forgo the rest of his base salary for the year.
Overall, it’s unclear how the current global health crisis will affect Disney in the long run. It won’t be clear whether or not the furloughs were necessary or the “right decision” until some semblance of normalcy returns.
What do you think of the move to furlough Disney employees? Share your thoughts in the comments.