The COVID-19 pandemic has brought substantial layoffs to Walt Disney Co.'s massive theme park operations and other units.
The Burbank-based company said Tuesday that it would lay off 28,000 domestic employees at its parks, experiences and products division, which includes Disneyland Resort and Disney California Adventure Park in Anaheim and Walt Disney World in Orlando, Fla.
The segment, which employs 177,000 people, also includes Disney businesses such as its retail stores and four cruise ships. The layoffs affect about 13% of Disney's 223,000-person global workforce.
The company's global parks division has been severely hobbled by the coronavirus health crisis. In April, Disney announced it was furloughing more than 100,000 workers after the pandemic forced the company to shut down its theme parks. Disney also cut expenses, slashed executive pay and suspended major projects to save money.
During the furlough period, Disney continued to pay for workers' benefits, including healthcare.
However, the profound, prolonged blow the coronavirus dealt to Disney's business spurred the company to make deeper cuts.
Walt Disney World has been operating with strict capacity limits and social distancing requirements, while California has not yet allowed theme parks including Disneyland to resume business, to the frustration of executives.
Josh D'Amaro, chairman of Disney's parks, experiences and products segment, called the decision "heartbreaking" in a memo to staff.
"As heartbreaking as it is to take this action, this is the only feasible option we have in light of the prolonged impact of COVID-19 on our business, including limited capacity due to physical distancing requirements and the continued uncertainty regarding the duration of the pandemic," D'Amaro said in the memo.
Disney will set up appointments with affected salaried and nonunion hourly employees in the next few days. The company is also expected to soon speak with union leaders representing Disney staffers, known as "cast members," to determine further steps, D'Amaro said. Of the 28,000 workers affected by the layoffs, 67% are part-time, the company said.
"For the last several months, our management team has worked tirelessly to avoid having to separate anyone from the company," D'Amaro said. "We’ve cut expenses, suspended capital projects, furloughed our cast members while still paying benefits, and modified our operations to run as efficiently as possible, however, we simply cannot responsibly stay fully staffed while operating at such limited capacity."
D'Amaro blamed the decision on the continued effect of COVID-19 on the company's operations, which has been "exacerbated in California by the state’s unwillingness to lift restrictions that would allow Disneyland to reopen."
D'Amaro has previously called on the state government to allow Disneyland to operate, saying the company is able to run the parks safely.
Disney last week pressed California Gov. Gavin Newsom to let Disneyland and Disney California Adventure reopen, while vowing to adopt stringent health precautions to help protect guests from the coronavirus.
The push echoed a news conference by Orange County officials, business owners and tourism industry leaders urging the state to adopt policies that would allow the resurgence of Disney parks, as well as Knott’s Berry Farm, arguing that closures had hammered the local economy.
The layoffs at Disney are the latest example of how severely the pandemic has damaged the economy, particularly in key California industries such as tourism. An estimated 31,000 people work at Disneyland Resort. Walt Disney World employs well more than 70,000 in Florida, making it one of the state’s biggest job sources.
California's unemployment rate was 11.4% in August, down from 13.5% in July.
Unite Here Local 11, which represents hotel workers at Disneyland Resort, said the union learned Tuesday that Disney would lay off about 950 of its members, effective Nov. 1.
"The union will engage in effects bargaining with the company over issues including job security and healthcare coverage," Unite Here Local 11 said in an emailed statement from spokeswoman Maria Hernandez.
The union also called on Newsom to sign a state bill known as AB 3216, which would establish a right-to-return policy on the hospitality industry, meaning employees who lose their jobs at hotels, airports and private clubs during the pandemic could return based on seniority when business returns to normal.
"This highlights the urgent need for AB 3216, the California state law that guarantees recall and retention for hospitality workers," the union said. "We are asking Gov. Gavin Newsom to sign AB 3216 now."
The health crisis has put a severe strain on virtually the entire entertainment industry, contributing to cuts at AT&T's Warner Media and Comcast Corp.'s NBCUniversal, whose parks remain closed in Universal City.
For Disney, the effect has been particularly devastating because of the firm's reliance on entertainment that is meant to bring people together, whether at theme parks or at cinemas. The crisis came to a head shortly after Bob Chapek, the company's former parks chairman, took over from Bob Iger as Disney's chief executive.
The company's ESPN sports-TV network was hard hit by the cancellation of live sporting events earlier this year. Disney's movie studio had delayed the release of blockbuster films amid theater closures across the country. Last week, Walt Disney Studios postponed 10 upcoming films, including Marvel's "Black Widow" and Steven Spielberg's "West Side Story." Hollywood is also trying to claw its way back to producing movies and TV shows again after months of shutdowns.
In August, Disney reported a third-quarter net loss of $4.72 billion for the three months that ended in June, compared with the $1.43 billion in net income the company reported for the same period in 2019. Excluding one-time items affecting profitability, Disney posted a profit of 8 cents a share, down 94% from the same period a year earlier.
Disney's parks, experiences and products segment suffered a $3.5-billion hit to operating income because of the effects of the coronavirus during the quarter, the company reported.
Times staff writer Todd Martens contributed to this report.
This story originally appeared in Los Angeles Times.