Coronavirus harms theme parks, costing Disney $ 2.6 billion

Disney suffered another heavy blow in its first fiscal quarter, as restrictions on attendance at its open theme parks and continued closures of its California parks weighed heavily on its results.

There is currently no timeline for Disneyland to reopen, as the state of California has said it will not allow theme parks to reopen until coronavirus cases dramatically decrease in the community. surrounding. Although the 7-day average of daily new Covid cases has declined from the previous week in California, more than 1,000 new cases are diagnosed each day in the state, according to CNBC analysis of data from Johns Hopkins University .

“Where we have been able to reopen our theme parks with limited capacity, customers have consistently demonstrated a willingness and desire to visit which we believe is a testament to their feeling confident in the protocols of health and safety that we put in place, ”CEO Bob Chapek said during an earnings call Thursday.

The company said the outbreak cost that division about $ 2.6 billion in lost operating income during the December quarter.

Revenue in Disney’s parks, experiences and products segment fell 53% to $ 3.58 billion.

Disney has reported similar losses in each of its last three profits. In the fourth quarter, the company said the coronavirus outbreak cost it around $ 2.4 billion in lost operating income during its most recent period. In the second quarter, the company said it 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.

Walt Disney World in Florida and Shanghai Disney Resort were open for the entire first quarter, while Disneyland and all Disney cruise operations were suspended.

Disneyland Paris was open until the end of October, about a third of the quarter, and Hong Kong Disneyland was open until the beginning of December, or about two-thirds of the quarter. The company expects its Hong Kong site to reopen in the second quarter.

“In terms of the outlook for the parks for the rest of the year, and the capacity, it’s really going to be determined by the public vaccination rate,” Chapek said. “This seems to us to be the biggest lever that we can maneuver to either take the fleets that are currently under limited capacity and increase them, or open parks that are currently closed.”

CFO Christine McCarthy said for open parks the company was able to turn a profit with customers. Revenues from visitors to the park have exceeded opening costs. She also noted that the company is happy with the number of bookings and bookings it receives.

As parks increase in capacity and reopen, Chapek said there would be some level of social distancing and mask wearing 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 of this year,” Chapek said. “If that happens, it’s a game-changer, and it could speed up our expectations and give people the confidence they need to come back to the parks.

“Will there be some overlap until we know we’ve achieved collective immunity?” he said. “Of course we will, but do we also believe that we will be in the same state of social distancing of 6 feet and wearing a mask in 2022? Absolutely not.”