While reports that the coronavirus is spreading like wildfire in the US are circulating through the media, another casino operator decided it is time to furlough most of its employees.
Uncertainty Requires Proactive Approach
Las Vegas-based gaming company, Boyd Gaming, announced yesterday additional measures to mitigate the financial impact from the closure of its brick-and-mortar facilities due to federal and local authorities’ efforts to contain the virus outbreak. Effective Saturday, April 11, the operator that has 29 land-based gaming properties across 10 states, 12 of which in Nevada, will place almost all of its team members, 24,300 employees, on furlough.
“This is by far the most difficult decision we have ever made. We care deeply about the well-being of our team members, which is why we maintained full pay and benefits through April 10. Implementing furloughs was a last resort for us, but a necessary step to protect our Company, especially given the current lack of visibility regarding property re-openings.”Keith Smith, President and CEO, Boyd Gaming
The continued closure of its gaming facilities and the uncertainty regarding when normal operations will resume forced Boyd Gaming to do what most of the other casino operators did so far to trim its costs.
A recent analysis estimated Boyd Gaming would be able to survive for more than 9 months on cash reserves, burning $3.2 million per day. By furloughing almost everyone, the company would be able to sustain business longer, a trait that may turn vital further down the road as the number of disease cases in the states are spiking by the day.
Only a limited number of Boyd’s employees will remain on payroll during the period of business closure, while furloughed team members that had enrolled in the operator’s health care plans, would continue to have their insurance premiums paid through June 30, or until they got re-hired, whichever of the two occurrences comes first.
Executive Salary Reductions
In addition to placing its workforce on furlough, Boyd Gaming announced significant salary reductions to its executive leadership team, as well as having its Board of Directors agreed to suspend the Board’s compensation.
The gaming operator that had recently announced it would suspend the payment of its quarterly dividend, said it would implement salary cuts for all non-furloughed team members from its corporate and property management teams.
Boyd Gaming outlined all capital projects would be reviewed by the Board of Directors, while all of the company’s non-essential spending has been put on ice indefinitely.
Financial markets reacted positively to the news that the gaming operator would trim its costs and improve on its business sustainability. Shares of Boyd Gaming jumped nearly 23% after the announcement, to $15.58 per share.