Cinemark Lays Off And Furloughs Staff Amidst Plans Of July 1 Reopening

While the Chinese conglomerate, the Wanda Group, has denied rumors of AMC Theaters’ imminent bankruptcy, Cinemark, America’s third largest theater chain has announced its decision to lay off over 17,500 of its hourly theater employees. The company has also furloughed 50 percent of its corporate employees who are suffering an 80 percent pay cut while continuing to receive their benefits. The salaries of the remaining employees have been reduced to half. The company’s board of directors are forgoing their salary through the COVID-19 pandemic.

Cinemark’s decision is the most recent announcement in the long line of industry decisions geared to combat the losses suffered before and after the pandemic. “The recent outbreak of the COVID-19 pandemic has had an unprecedented impact on the world and our industry. The situation continues to be volatile and the social and economic effects are widespread,” Cinemark mentioned in an SEC filing of the company’s $250 million debt offering in senior secured notes due in 2025. A Deadline report says that Cinemark is not looking to buy any new assets with its resources, for now. “As debt starts to settle and when the COVID crisis starts to decline, and we get confirmation of when theaters can reopen, we will certainly consider them,” said Cinemark CEO and Board Director Mark Zoradi, “There’s going to be time and opportunity to consider that at a later date.”

Cinemark closed all 345 of its theaters earlier in March and in a call with investors and financial analysts, the company’s CFO and COO Sean Gamble expressed Cinemark’s plan to reopen some of them by July 1. While he intends to have the company’s workforce join back work by mid-June, they plan to begin reaching out to their customers by the end of June. “We won’t be everything back day 1, but dip our toe approach,” Gamble added cautioning that business won’t be back to normal right away. However, he added that Cinemark is set to make profits even on a 20-30 percent theater occupancy. “Our lowest attended month had occupancy levels of 10% and we still operated profitability,” he added.

To lure in audiences and get them excited for the big releases like Christopher Nolan’s Tenet,  (scheduled to release on July 17) and Disney’s Mulan (scheduled to release on July 24), Cinemark will be playing previously released popular films starting July 1. “We’ll charge less when we start to get people back with high profile library product. We’ll be able to make deals with studio partners prior to the big tentpoles coming,” Zoradi added. Accommodating social distancing concerns that may still prevail, he added that Cinemark will consider selling tickets to alternate seats and/or suspending reserved seating. 

Gamble also informed that Cinemark’s bond offering was oversubscribed and that the company was also exploring ways of securing governmental aid under the CARES Act. The theater chain is negotiating with landlords and suppliers to come up with arrangements regarding rent and other payments.