Walt Disney, the world's biggest entertainment group, is going to furlough more than 100,000 employees this week as a cost-saving measure during the pandemic. These are mostly cast members in its theme parks. Disney is now incurring colossal financial losses as its theme parks and hotels have been shut in Europe and the US for almost five weeks due to the coronavirus lockdowns. Hence, the company has been paying salaries to its non-working employees over the last five weeks. However, on April 2, the entertaining giant announced that the salary payments would soon stop. "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", Disney made a statement. Nevertheless, the company pledged to give full healthcare benefits to its staff placed on unpaid leave. Besides, such employees may apply for government benefits through the $2 trillion coronavirus stimulus package. By taking such drastic measures, Disney will save about $500 million per month, keeping its payrolls afloat. Major market experts gave a positive assessment of this extreme cost-saving measure. “With labor accounting for approximately 45% of operating expenses and 33% of total expenses, we assume notable savings,” JPMorgan’s Alexia Quadrani said about Disney’s decision. However, some economists believe that these measures will cast a shadow on the company’s reputation and lead to disastrous consequences in the future. Curiously enough, Disney does not stop its executive-bonus schemes and a $1.5 billion dividend payment to shareholders.
