Coronavirus damage theme parks, costing Disney $2.6 billion
An employee cleans the grounds behind the closed gates of Disneyland Park on the first day of the Disneyland and Disney California Adventure theme parks closure in Anaheim, California on March 14, 2020.
DAVID MCNEW | AFP | Getty Images
Disney suffered another financial blow in the first quarter of fiscal as restrictions on participation in its open theme parks and continued closure of its California parks weighed heavily on bottom-line earnings.
There is currently no schedule for Disneyland to reopen as the state of California has announced that it will not allow theme parks to reopen until coronavirus cases in the surrounding community have declined significantly. Although the 7-day average of daily new Covid cases is down from the previous week in California, more than 1,000 new cases are diagnosed in the state every day, according to a CNBC analysis of data from Johns Hopkins University.
“Where we have managed to reopen our theme parks with limited capacity, guests have always shown their willingness and desire to visit them. We believe that this is evidence that they are in the health and safety areas we set Security protocols feel safe in place, “said CEO Bob Chapek during an earnings call on Thursday.
The company said the outbreak cost that division an operating loss of approximately $ 2.6 billion in the December quarter.
Disney Parks, Experiences, and Products revenue decreased 53% to $ 3.58 billion.
Disney has reported similar losses in each of its last three wins. In the fourth quarter, the company announced that the coronavirus outbreak has cost around $ 2.4 billion in operating losses recently. In the second quarter, the company had reported it had lost $ 1 billion in operating income due to the pandemic, and in the third quarter the pandemic reduced its operating income by $ 3.5 billion.
Florida Walt Disney World and Shanghai Disney Resort were open for the entire first quarter, while Disneyland and all of Disney’s cruise business were shut down.
Disneyland Paris was open until late October, about a third of the quarter, and Hong Kong Disneyland was open until early December, or about two thirds of the quarter. The company expects its Hong Kong facility to reopen in the second quarter.
“In terms of the parks’ prospects for the rest of the year and capacity, this will really depend on the public’s vaccination rate,” Chapek said. “That seems to us to be the biggest lever we can maneuver to either enlarge the parks with currently limited capacity or to open up the parks that are currently closed.”
CFO Christine McCarthy said the company could make a profit from guests for the parks open. The income of the park visitors outweighed the costs of the opening. She also noted that the company is happy with the number of reservations and bookings it sees.
As the parks expand and reopen their capacity, Chapek will wear some level of social distancing and masks for the rest of the year.
“Dr. Fauci said earlier today that he hopes there will be vaccines for anyone who wants them by April this year,” Chapek said. “If that happens, it’s a game changer and that could accelerate our expectations and give people confidence that they need to return to the parks.”
“Will there be some overlap by the time we know we get herd immunity?” he said. “Sure we will, but do we also think we’ll be in the same state of 6 feet of social distancing and mask-wearing in 2022? Absolutely not.”