AMC Entertainment Holdings (NYSE:AMC) furloughed 26,000 of its 27,000 employees last week as multiplexes shut their doors across the country. The other shoe dropped on Wednesday, when AMC also furloughed 600 workers at its corporate headquarters, including CEO Adam Aron.
The coronavirus pandemic compelled AMC to close all of its screening locations nearly two weeks ago, leaving the company with zero revenues but a significant weekly outlay for fixed costs. The furloughs will greatly reduce its operating costs, though AMC still remains on the hook for location leases, minimal upkeep, and basic security.
Aron said that the company is preserving cash in order to allow the theaters to reopen once the coronavirus pandemic has passed. AMC has now placed 98.5% of its total staff on forced leave with either greatly reduced pay or no compensation at all. But it isn't firing anybody at this point, so employees are still getting benefits such as health insurance.
"As we all know, these are unprecedented times," Aron said. "AMC is doing everything possible to ensure that we can welcome back both our associates and our guests as our theatres reopen."
AMC's reaction seems less severe in some ways than those of its chief competitors. AMC's furloughed staffers are still active employees with health benefits, while the furloughed workers of Cinemark (NYSE:CNK) and Regal only received short-term COBRA health coverage and will have to reapply for their jobs later. However, there is an unconfirmed report that Cinemark did give its furloughed workers two weeks' pay.
Of course, a lengthy shutdown could force Regal and Cinemark to furlough their executive officers as well, and AMC might have to let people go in the end. The entire movie industry is buckling under the pandemic's assault, and the only thing that's certain is that Hollywood will look different when this crisis ends.