Entertainment giant Walt Disney (NYSE:DIS) is now suspending salary payments to over 100,000 employees, mostly cast members in its theme parks. The company employs 70,000 people in its Orlando location alone.
Disney ordered the shutdown of all its parks on March 14 due to the COVID-19 health scare. The company has been paying its non-working employees over the last five weeks, but the company announced on April 2 that the salary payments would soon end.
"The COVID-19 pandemic is having a devastating impact on our world with untold suffering and loss, and has required all of us to make sacrifices," the company said in a public statement.
The company continued:
Over the last few weeks, mandatory decrees from government officials have shut down a majority of our businesses. Disney employees have received full pay and benefits during this time, and we've committed to paying them through April 18, for a total of five additional weeks of compensation. However, with no clear indication of when we can restart our businesses, we're forced to make the difficult decision to take the next step and furlough employees whose jobs aren't necessary at this time.
COVID-19 shutdowns have been a disaster for the theme park industry. Six Flags stock has dropped 66% in 2020. Shares of Sea World are down 65% in 2020, and Cedar Fair has dropped 53%. Disney itself has lost 28% of its market cap since Jan. 2.
The move to furlough many of its employees will save Disney about $500 million a month in expenses. The company has drawn on its credit facilities and has about $20 billion in cash to weather this storm.
Shares are down 3% in early trading on Monday.