Walt Disney will suspend payments for nearly half of its workers, aiming to cut costs and mitigate the economic impact of the coronavirus pandemic.
The US-based corporation will reportedly stop paying more than 100,000 employees this week to save up to $500 million a month.
Earlier this month, it was announced that about 43,000 unionized Walt Disney World employees are to furloughed starting April 19. The corporation’s theme parks and hotels are closed for over five weeks.
Media reported that, by leaving its staff reliant on government benefits and cutting costs in a “more severe way than other theme-park owners”, Disney might face “significant reputational risks”, especially when it continues to honor executive bonus schemes and dividend payment due in July.
Disney’s shares were down 1.8% around midday Monday. The shares have declined nearly 27% since February 19.
Even when Disney reopens its parks, analysts expect attendance to be 50% of 2019 levels and climb back to 75% in the second half of 2021.
The announcement faced major criticism, with many vowing never to visit their theme parks again. “Disney net revenue in 2019 was $11B. They can afford to keep 100K employees in payroll for a long time. This decision is about greed”, observers said.