Shanghai Disneyland may have been able to reopen, but Disney could be on track to lose around $1 billion in earnings before interest and taxes each month from the rest of its parks being closed due to the coronavirus pandemic.
Earlier this month, Disney revealed that its parks, experiences and consumer products segment took a $1 billion hit in revenue during the second quarter because its parks, cruises and stores were forced to shutter. That loss has been the baseline for analysts to forecast future losses in the third quarter and beyond.
"We intend to continue doing work to refine this estimate, but we don't have much to go on," Todd Juenger, analyst at Bernstein, wrote in a research note Wednesday. "Disney did not provide nearly as much information as we had hoped with respect to the burn rate of Parks while they are closed, or the economics of opening at reduced capacity."
During the second quarter, Shanghai Disneyland was closed for more than half of the quarter, while domestic parks, Paris Disneyland and Tokyo Disneyland were closed for only a few weeks.
So far in the third quarter, all parks remain closed except for Shanghai Disneyland, which reopened on May 11 with reduced capacity. Juenger said it's hard to gauge what the impact is of running the park with fewer guests in attendance. Currently, it is allowing less than 30% of its typical capacity into the park.
Meanwhile, Disney is saving on labor costs elsewhere, as its parks employees were furloughed in mid-April and executives took salary reductions.
"Balancing the offsets, for now we estimate the approximate monthly impact on [earnings before interest and taxes] will remain in the $1 billion range," Juenger wrote.
When Disney reopens its other parks, it is likely they will also welcome fewer guests for a period of time. Expectations are that Disneyland and Walt Disney World will operate at well under 50% capacity.
Despite these headwinds, Juenger said his firm remains "unconcerned about liquidity, refinancing, or even covenants," when it comes to Disney.
"To extent Disney trips any financial covenants, we are quite confident the banks would grant them an exception," he wrote.
This week, Walt Disney raised nearly $11 billion in an offering of senior notes, with maturities ranging from 2026 to 2060. On March 28, it had around $14.3 billion in cash on hand.