Vail Resorts on Wednesday announced at least a one-month furlough and a six-month salary reduction for the majority of its employees in response to the COVID-19 crisis and subsequent operational shutdown. Here’s that press release:
Vail Resorts, Inc. (NYSE: MTN) today provided an update on its response to the evolving impact of COVID-19 on its business.
Rob Katz, Chief Executive Officer, said, “The circumstances surrounding COVID-19 are unprecedented and the financial impact to our Company and the broader travel industry has been significant. Following the difficult decision to close our North American mountain resorts, retail stores and lodging properties for the remainder of the 2019/2020 North American ski season, we have quickly transitioned to evaluating the longer-term impacts for our Company and our resort operations. While we will continue to assess our ability to reopen select resorts for late-season skiing, we are keenly aware that the current travel restrictions may stay in place beyond that timeframe and could ultimately impact the timing of our ability to open our North American resorts for their summer season and our Australian resorts for their winter season. And once we are able to reopen, we assume weaker travel demand may continue, impacting our fourth fiscal quarter of 2020 and our first fiscal quarter of 2021.
“The Company went into this challenging time period with a strong financial position and based on recent events, we are currently incorporating more challenging scenarios into our planning for our fourth fiscal quarter of 2020 and the first fiscal quarter of 2021. As mentioned in our March 18, 2020 press release, we are taking additional proactive steps to align our capital spending and return of capital approach to ensure that we remain positioned for long-term success. We are also taking steps to address our operating costs and the inability of many of our employees to perform their roles in the current environment.
“We are reducing our capital plan for calendar 2020 by approximately $80-$85 million, with the vast majority of these savings coming from the deferral of many of our discretionary capital projects. We are planning to defer all new chair lifts, terrain expansions and other mountain and base area improvements, while continuing with the vast majority of our maintenance capital spending.
“In this moment, we believe that maintaining liquidity is in the best long-term interests of the Company and our shareholders, and, as such, the Company’s Board of Directors has made the decision to suspend our quarterly cash dividend for the next two quarters, preserving over $140 million of liquidity for our business. We remain committed to returning excess capital to shareholders and will re-evaluate decisions on capital allocation in December 2020. The Company’s previously announced dividend payment occurring on April 9, 2020, is not affected by this suspension.
“To ensure we can navigate the financial challenges ahead and because of the reality of their inability to work at their locations, we have made the difficult decision to furlough the majority of our U.S. year-round hourly employees for at least a month, and potentially longer depending on when we are able to reopen our operations. We will be continuing healthcare coverage for these employees, including covering the entire cost of their healthcare premiums and hope to bring these employees back to work as soon as possible. Additionally, we will be implementing a six-month salary reduction for all U.S. salaried employees, with reductions beginning at 5% and rising to 25% for our top executives. As CEO, I will be foregoing my full salary for the next six months and our Board of Directors will also be foregoing 100% of their cash compensation during this period. We also may announce potential changes for our Canadian-based and Australian-based employees, but our approach will be based on the unique challenges faced by those resorts and any other local considerations.
“We have also communicated with our season pass holders and indicated that we have heard their frustration about the early closure to the 2019/2020 ski season and are committed to identifying an approach for them that acknowledges this past season and retains their loyalty for the future. We intend to share more details about our season pass plans with our guests by the end of April and are deferring all auto-renew charges and all spring deadlines for Buddy Tickets into May.
“This is one of the most challenging times many of us can remember, and it is disappointing to announce these changes, especially those impacting our employees. However, we also recognize that the impacts of the current crisis have certainly hit the travel industry and our Company quite hard. We believe that the actions we are announcing today will allow the Company to maintain cushion on our liquidity and financial covenants under our credit facilities through the upcoming quarters and position the Company for success in the future. I am evermore grateful for the commitment and loyalty of our employees, guests and community members during this challenging time.”