Cineworld Group (CINE.L) shares tanked 56% in early trade in London as investors digested news that the chain would temporarily suspend operations at all its outlets in the UK and US, putting 45,000 out of work, including about 5,500 jobs in the UK and Ireland.
536 Regal theatres in the US and its 127 Cineworld and Picturehouse theatres in the UK will close their doors from Thursday 8 October.
The chain put out a statement on Monday saying: “Cineworld's main priorities remain the safety of customers and employees, cash preservation and cost reduction.
“As noted in its Interim Results announced on 24 September 2020, Cineworld is assessing several sources of additional liquidity and all liquidity raising options are being considered.”
News broke over the weekend that operations would close in the UK and Ireland. Reports, first published in the Sunday Times said that the operator plans to write to prime minister Boris Johnson and the culture secretary, Oliver Dowden, to say that the industry has become “unviable.”
Mooky Greidinger, CEO of Cineworld, said: "This is not a decision we made lightly, and we did everything in our power to support safe and sustainable reopenings in all of our markets - including meeting, and often exceeding, local health and safety guidelines in our theatres and working constructively with regulators and industry bodies to restore public confidence in our industry.
“We are especially grateful for and proud of the hard work our employees put in to adapt our theatres to the new protocols and cannot underscore enough how difficult this decision was, Cineworld will continue to monitor the situation closely and will communicate any future plans to resume operations in these markets at the appropriate time, when key markets have more concrete guidance on their reopening status and, in turn, studios are able to bring their pipeline of major releases back to the big screen."
The cinema industry has been dealing with the fallout following widespread shutdowns due to COVID-19.
On Friday, MGM and Britain’s Eon Productions announced that “No Time To Die,” which was first scheduled for release in April 2020, would be pushed back for the second time.
Film industry bosses hoped the James Bond movie, which was due to hit UK cinemas on 12 November would boost cinema-goers and revive the sector.
Other blockbusters such as Marvel’s “Black Widow” and “West Side Story” have also been delayed until 2021.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown said: “The spread of Covid-19 around the world has been a horror movie for the industry and the fresh wave of infections is the latest instalment in what’s been a devastating story for cinema chains.
“New infection spikes amid warnings that the virus spreads more quickly indoors, is keeping customers away and with no big names to lure them through the doors this winter, Cineworld has reached this difficult decision in a bid to cut costs and preserve cash.
“The news will increase the clamour for more support for the entertainment, recreation and arts industry which still has 51% of workers on furlough.”
Cineworld, which has 128 cinemas in the UK, started reopening its theatres in July after lockdown measure were eased. At the time, Cineworld Group said that 561 of its 778 global sites had reopened, with 200 cinemas in the US, six in the UK and 11 in Israel still closed.
Work and Pensions Secretary Therese Coffey insisted there has been “a lot of support” for companies, after Cineworld confirmed plans to temporarily shutter its theatres in the UK.
Speaking on Sky New, she said: “We cannot make every economic decision for companies, it’s up to them to make that choice, but I do think, frankly, there has been a lot of support in order to try and keep people in jobs, and I know that businesses recognise that.”
Watch: Cineworld shutting down operations, slashing jobs