MGM Resorts International MGM 4.60% is laying off 18,000
furloughed workers in the U.S. as a global travel slowdown impedes the casino
industry’s recovery from the ongoing pandemic.
The job cuts, which start Monday, represent about one-fourth
of the company’s pre-pandemic workforce of 68,000 U.S. employees. After casino
shutdowns and furloughs in March, the continuing spread of coronavirus in the
U.S. has prevented the rebound of many industries, including hospitality,
airlines and oil extraction.
U.S. employers added 1.8 million jobs in July, but the
country still had about 13 million fewer jobs than in February, according to a
Labor Department report in early August. The unemployment rate in July was
10.2%.
American Airlines Group Inc. said this week it will cut
19,000 workers by Oct. 1, and Delta Air Lines Inc. said it would furlough 1,941
pilots unless a deal is reached with their union on cost-cutting. Oil-field
services provider Schlumberger Ltd. said in July it is cutting 21,000 jobs amid
a historic oil downturn. The announcements are part of a wave of job furloughs
expected to become permanent cuts this year.
In a letter to workers Friday, MGM Resorts Chief Executive
Bill Hornbuckle said the company is required by federal law to send layoff
notices to furloughed workers who haven’t been recalled after six months. But
MGM still plans to rehire those workers as business demand returns.
“While the immediate future remains uncertain, I truly
believe that the challenges we face today are not permanent,” Mr. Hornbuckle
wrote. “The fundamentals of our industry, our company and our communities will
not change. Concerts, sports and awe-inspiring entertainment remain on our
horizon.”
MGM will maintain a recall list of former employees, and
workers who return before the end of 2021 will retain seniority and immediately
resume benefits, the company said. Health benefits for cut workers are being
extended through Sept. 30.
On the Las Vegas Strip, where casinos rely on vacationers
and convention attendees from around the world, gambling revenue was down 39%
in July from the previous year, bringing in about $330 million compared with
nearly $543 million a year earlier.
Nevada’s casinos were allowed to reopen June 4 at 50%
occupancy per social-distancing requirements, and MGM Resorts phased in casino
reopenings over the following weeks. Two of MGM’s 13 Strip resorts, Park MGM
and the NoMad, are still closed, and MGM’s Mirage casino reopened this week.
The company has also reopened its casinos in Michigan, Mississippi, Maryland
and Massachusetts. MGM Resorts reported a 91% drop in revenue for the
three-month period that ended June 30, a similar decrease to other operators on
the Strip.
Write to Katherine Sayre at katherine.sayre@wsj.com
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