Disney suffered another financial blow from the Covid pandemic during its fiscal second quarter, as restrictions on attendance at the open theme parks and the continued closure of the parks in California weighed heavily on profits.
However, the future for Disney parks is turning brighter. The Disneyland Resort reopened on April 30 and many pandemic restrictions are beginning to relax or be removed completely. The Centers for Disease Control and Prevention said on Thursday that fully vaccinated people in most environments no longer need to wear masks.
Disney’s parks, experiences and products sales fell 44% to $3.2 billion as many of the theme parks closed or operated at reduced capacity and the cruise ships and tours were suspended.
The company said the outbreak cost this division about $1.2 billion in lost business revenue in the last quarter. Disney has reported similar losses in each of its last four earnings reports.
Disney reopened its two California parks on April 30, so any revenue generated in the past few weeks will not be reflected in its fiscal second quarter results. However, the reopening of the parks could raise expectations for the fiscal third quarter. As of Thursday, Disney’s Paris-based theme park is the only location not reopened to the public.
“Our parks and resorts that were open during the quarter operated at significantly reduced capacity, but all met the goal of a net positive contribution, meaning revenue exceeded the variable costs associated with opening,” said Chief Financial Officer Christine McCarthy during a profit call Thursday.
And as vaccination rates continue to rise and fewer coronavirus cases are reported in the United States, Disney is adjusting its health and safety guidelines.
“We’re going to be able to increase our capacity limits; we’ve actually already started that,” says CEO Bob Chapek. “Given the guidance that came today from the CDC and the previous guidance we received from the Florida governor, we have already started to increase our capabilities.”
The CDC has also issued guidelines that vaccinated individuals should not wear masks indoors or out, he said. These new guidelines may cause Disney to change its mask policy in the future.
“[It’s] big news for us, especially if someone has been to Florida in the middle of summer with a mask on,” Chapek joked. “That can be quite daunting, so we think this will make for an even more enjoyable experience.”