MGM Resorts is laying off 18,000 workers who had been on furlough since March terminating a quarter of its pre-pandemic workforce
MGM Resorts International will lay off 18,000 previously furloughed workers in the United States as widespread travel restrictions due to the coronavirus crisis continue to dent its operations.
The casino operator told employees in separation letters sent Friday they are ending employment from Monday, August 31, CNBC reports.
The letter said the company will recall additional employees as more if its properties reopen and will offer health benefits to furloughed employees through to September 30.
The location of the job cuts was not confirmed. The company is among Nevada's largest employers, where it has 13 resorts on the Vegas Strip, but also operates casinos in Mississippi, Massachusetts, Michigan, and overseas in Macao, China.
MGM Resorts International will lay off 18,000 previously furloughed workers from Monday as the company struggles amid the ongoing pandemic. Pictured, the MGM Grand in Vegas
MGM CEO Bill Hornbuckle, pictured in May, wrote a separation letter to employees Friday
The company had about 52,000 full-time and 18,000 part-time employees in the US as of December 31, meaning that Friday's announcement will affect a quarter of the its pre-pandemic workforce.
Chief Executive Officer Bill Hornbuckle said that employees who will be laid off on Monday will remain in the company's recall list, with those returning to work by end of 2021 retaining their seniority and benefits.
'Federal law requires companies to provide a date of separation for furloughed employees who are not recalled within six months,' Hornbuckle explained in the letter. 'Regrettably, August 31, marks date.'
Casinos in Nevada closed March 17 and unemployment in the state reached 28.2 percent, topping levels last seen during the Great Depression. Casinos reopened in early June, but the climb back has been long and slow.
They were allowed to welcome back guest from June 4 but only at 50 percent capacity.
MGM's Empire City in New York and Park MGM in Las Vegas have remained closed as the coronavirus pandemic continues throughout the country and the casino industry takes a massive hit.
Even the company's properties that have reopened on the Las Vegas Strip have been drastically affected by the massive slump in travelers and tourists, as well as the lack of sporting events and conferences being held.
Visitor volume in July was down 61 percent compared with the same period last year, according to the Las Vegas Convention and Visitors Authority.
Despite the improved cleaning measures, Las Vegas casinos remain quiet
The Vegas Strip is struggling to recover from the three month closures. Pictured is the Bellagio located on the strip which is operated by MGM who also hold a stake in the resort
Gambling revenue in Vegas was also down 38 percent, bringing in about $330 million compared with nearly $543 million a year earlier.
'I understand the impact this will have on these employees and their families. Nothing pains me more than delivering news like this,' Hornbuckle wrote.
'The heart of this company is our employees and the world-class service you provide. Please know that your leadership team is working around the clock to find ways to grow our business and welcome back more of our colleagues.'
According to the La Vegas Review Journal, MGM furloughed nearly 63,000 employees this year as the pandemic first struck and lockdowns began.
MGM has since called back 'tens of thousands' of workers since restrictions were eased.
MGM's Empire City in New York remains closed as the company lays off thousands
Other casino operators may soon be following suit in laying off employees as labor costs remain their highest expense.
Circus Circus and Penn Nation Gaming Inc. have already issued a legal notice to employees that they may be forced to do so, the Review Journal reports.
Hornbuckle remained optimist in Friday's letter, despite the bad news.
'While the immediate future remains uncertain, I truly believe that the challenges we face today are not permanent,' he said.
'We will bounce back from this — stronger and better than ever. And we will continue in our mission to entertain the world.'
He was only named as the permanent appointee for the company's President and CEO in July after previously acting in the role since March.
Shares in the company began to climb Friday as the news was announced and were up 5.26 percent in the afternoon.
They had already been steadily climbing back after a dive following the closures in March.
The company also received a boost from August 10 when media and internet company IAC bought a 12 percent stake in the casino operator as part of a bet on online gambling.
MGM's shares soared 14 percent after the announcement.
Stocks in MGM Resorts International began to rise Friday afternoon after the announcement
The company was hit hard in the past six months but beginning to recover
Lockdown closures of casinos sent shares plummeting in March. They reopened in June
A number of companies are announcing jobs cuts as the U.S. economy suffered its sharpest contraction in at least 73 years in the second quarter due to disruptions induced by the pandemic, with corporate profits sinking deeper.
Earlier on Friday, Coca-Cola said it was offering buyouts to 4,000 employees ahead of pending layoffs.
Half of Coca-Cola´s sales come from stadiums, movie theaters and other places where people gather in large numbers - venues that have been closed during the coronavirus pandemic.
Revenue tumbled 28 percent in the Atlanta company's most recent quarter.
United and American airlines, beset by plunging air travel, cut thousands of jobs this week.
Tech company Salesforce is cutting 1,000 jobs and Bed Bath & Beyond cut 2,800 positions.
Those numbers represent only a fraction of the carnage across the U.S. economy.
Thursday, the Labor Department reported that another million Americans applied for unemployment benefits. More than 14.5 million are collecting traditional jobless benefits - up from 1.7 million a year ago - with no end in sight.
Initial claims for state unemployment benefits totaled a seasonally adjusted 1.006m for the week ended August 22, compared to 1.104m the prior week, it was announced Thursday
The Conference Board, a business research group, reported this week that consumer confidence has tumbled to its lowest level since 2014.
Consumer spending makes up about 70 percent of the economic activity in the U.S.
And although U.S. consumers increased their spending by 1.9 percent last month, it's a small dose of support for an economy struggling to emerge from the grip of a pandemic that has held back a recovery and kept roughly 27 million people jobless.
Congress passed the $2.2 trillion CARES Act stimulus package to blunt the downturn in the pandemic's opening weeks, however provisions of the bill supporting laid-off workers, small businesses as well as key industries have already expired or will do so soon, raising fears of prolonged economic damage.
The United States is home to the world's worst coronavirus pandemic with more than 180,000 dead and 5.8 million infected.
In Nevada, there have been 67,220 as of Thursday evening and 1,271 deaths.
Numbers spiked again in the state Thursday with 554 new cases and 21 additional deaths.
