Disney’s salvage ride relies on Delta as theme parks cash in
Aug 13 (Reuters) – Walt Disney Co (DIS.N) ‘s path to a sustained recovery in its theme park business will hinge on one question: Can the entertainment giant keep its parks open for the rest of the world? year ?
Disney chief financial officer Christine McCarthy said Thursday that the company’s theme parks are expected to be fully staffed by the end of this year to meet growing demand.
Those plans could be turned upside down by the spread of the more infectious Delta variant of the coronavirus, which is ravaging Florida, home to Disney’s largest park, as well as other U.S. states with lower vaccination rates.
“Disney’s ability to keep its parks and resorts open is clearly of the utmost importance to its bottom line,” said Joe McCormack, analyst at Third Bridge.
“Whether (the parks remain open) will be largely determined by the Delta variant.”
While the success of the company’s video streaming operations encouraged others on Wall Street, some analysts and investors worried about the parks’ prospects.
“It is clear that the parks will not return to full capacity for some time,” said PP Foresight analyst Paolo Pescatore.
For now, Disney executives have adopted a confident tone and said demand for its parks has not abated.
“The main noise we’re seeing right now is really about group or convention cancellations,” said CEO Bob Chapek. “But overall, we are seeing very high demand for our parks.”
Disney shares rose 4.7% to $ 187.69 in pre-market trading on Friday, after optimistic third-quarter results prompted at least six brokerage groups to raise their share price targets.
The virus has also had varying impact on the national and international businesses of theme park operators.
Link to chart on theme park operators making profit: https://tmsnrt.rs/3m1lo9Y
An important factor weighing against a full recovery is the deterioration of international air travel, experts said.
“This could dampen park attendance – especially international parks like Paris and Hong Kong that rely on cross-border travel,” said Nicholas Hyett, analyst at Hargreaves Lansdown.
Disney, Comcast (CMCSA.O) and Six Flags (SIX.N) have been optimistic about their domestic operations, but offered a cautious view of their international operations, which rely heavily on influxes of tourists.
Airbnb Inc (ABNB.O) and Southwest Airlines (LUV.N) both warned this week that the spread of the delta variant could affect their operations. Read more
Reporting by Eva Mathews and Subrat Patnaik in Bengaluru, additional reporting by Lisa Richwine in Los Angeles and Tiyashi Datta in Bengaluru; Editing by Saumyadeb Chakrabarty
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