MGM resorts lays off 18,000 workers
Casino industry struggles to regain business after pandemic shutdowns
Hard Rock International chairman Jim Allen says coronavirus has been a learning process and adding hiring extra security has shown positive results.
MGM Resorts International MGM +5.70% 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.
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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%.
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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.”
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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.