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In addition to 17,000 early layoffs of seasonal employees, Alterra Mountain Company has made the difficult decision to furlough many of its year-round workers and defer capital projects. Affected workers will remain employed with benefits such as health insurance but will not receive any pay for the foreseeable future. CEO Rusty Gregory will forego his entire salary as long as full time employees are furloughed. Employees in key roles who continue to work will receive full salaries for now. “While it is my fervent intent to avoid reducing anyone’s full pay rate for work going forward, we do not know how long this crisis will continue,” said Gregory in a letter to employees. “It is imperative that we ensure that our finite resources last long enough to get us to the other side of this pandemic and fully open for operation when the time comes.”
More than 50 percent of planned capital spending will be cut. In a sign of just how fast the coronavirus changed everything, Alterra announced $223 million worth of improvements just four days before being forced to shut down all 15 of its resorts. Postponed Alterra lift projects are both located at Mammoth Mountain in California, where Doppelmayr was slated to replace the mountain’s two oldest high speed quads with six place models. The Broadway Express and Canyon Express were constructed in 1988 and 1994, respectively. Alterra also announced last month the purchase of a Doppelmayr high speed quad for Tremblant, Quebec to be installed in 2021. The future of that project will be determined at a later date.
Boyne Resorts and Doppelmayr have reached an agreement to delay construction of two major lifts due to the Coronavirus emergency. Both Swift Current 6 at Big Sky Resort and Kancamagus 8 at Loon Mountain will now be constructed in 2021. “Proceeding with a complex and deadline sensitive construction project during the COVID-19 emergency would not be a prudent decision,” stated Troy Nedved, General Manager at Big Sky Resort. “Concerns about construction worker health and the unknowns related to the construction supply chain make the project too risky to undertake in 2020,” he continued.
Site preparation and limited construction may proceed this summer if public health conditions permit. Manufacturing of Swift Current’s components is nearly complete and the lift will be stored either in Wolfurt, Salt Lake or the Bozeman-Big Sky area until next year. When completed in 2021, Swifty will become the fastest six place chairlift in North America.
At Loon Mountain, skiers and riders will have to wait another year to ride the east’s first eight passenger chairlift, Kancamagus 8. “Although significant investment has already been made, we cannot proceed with a project of this scale knowing the COVID-19 situation could further complicate its installation – potentially cutting off the Governor Adams Lodge and base area from the rest of the resort next winter,” said Loon General Manager Jay Scambio in a letter to season passholders. “This postponement allows us to better support our team, our guests, and the greater Loon community at a time when it is needed most.” Permitting and planning will continue in preparation for 2021 installation.
I spoke with Boyne Resorts President Stephen Kircher this morning about the decision and his outlook during this challenging time. The company will closely monitor impacts on summer business as well as season pass sales and proceed accordingly. “We are going to be assessing our capital projects each week,” said Kircher. “We’ve got milestones on every single project and last possible start dates to meet deadlines for next winter. We’re optimistic we are going to be executing a number of projects but we need to see clarity.”
As long duration, all-or-nothing projects, the two D-Line lifts had to wait. Boyne knew it needed to be underway this week at Loon and within two weeks at Big Sky in order to meet aggressive construction schedules. Bubble lifts by definition include carrier storage buildings that are as complex to build as the lifts themselves. “What happens if work stoppages occur again in the middle of summer or the fall?” lamented Kircher. “Once we tear the existing lifts down, we’re at risk. We would be dead in the water [without Swift Current or Kancamagus.] The second worst thing other than this shutdown would be not having a key lift coming out of the base next winter.”
Boyne’s decision is the second such deferral among North American multi-resort operators this week. On Wednesday, Vail Resorts delayed seven different lift projects with two different manufacturers in order to cut costs. Kircher acknowledged his decision was difficult for both customer and supplier but in some ways proved clear. “We are working with a great partner in Doppelmayr. Obviously they are dealing with a lot of difficult conversations across the planet,” he said. “We talked through what the best scenario was for both companies. They don’t want to be in a situation where they can’t finish a lift either. I want to install a lift that we own and is sitting in warehouses more than anybody but it’s just not prudent.”
Ski industry fallout from the global pandemic continues. Vail Resorts today announced the deferral of lift construction projects slated for Beaver Creek, Breckenridge, Keystone and Okemo due to a dramatic decline in revenue, which is expected to continue into fiscal year 2021. The suite of projects was first announced last December, the same month COVID-19 first appeared in Wuhan, China. While the virus spread across Asia, lift manufacturers were gearing up to build lifts that now won’t happen this year. Beaver Creek had planned a major expansion into McCoy Park and Okemo earmarked a new bubble six pack for Jackson Gore. Both Breckenridge and Keystone planned new chairlifts to increase uphill capacity in high traffic areas.
Vail said weeks ago coronavirus will cost the company between $180 and 200 million in March and April alone. Eliminating lift construction, terrain expansions and discretionary base area improvements will save the publicly-traded company $80 to 85 million while allowing the vast majority of maintenance capital projects to proceed. “The circumstances surrounding COVID-19 are unprecedented and the financial impact to our Company and the broader travel industry has been significant,” noted Rob Katz, Chief Executive Officer of Vail Resorts. “We are taking proactive steps to align our capital spending and return of capital approach to ensure that we remain positioned for long-term success.” Other steps revealed today include the furlough of nearly all year-round hourly employees, suspension of the company’s shareholder dividend, salary reductions for non-hourly employees and elimination of cash compensation for the CEO and board of directors.
The decision to postpone lifts is a blow to both major lift manufacturers but particularly Leitner-Poma, which like Vail itself, is Colorado-based. The firm had been awarded contracts to build three detachable chairlifts and move another this summer. Doppelmayr USA had planned to install the two machines at Beaver Creek.
As goes Vail, often go others. While I’m hopeful some lifts (and the jobs that come with them) are safe, more deferrals are possible. Rival Alterra Mountain Company planned to add only two lifts this year, both six place chairlifts at Mammoth Mountain. The privately-held group has not announced any changes to its capital plan thus far. In tough times, every company is understandably revisiting capital budgets and commitments, however.
The sudden onset of such deep uncertainty in this critical period of the lift production cycle is unprecedented. With the elimination of Vail Resorts projects for 2020, announced US and Canada complete new lifts stand at 24, fewer than Doppelmayr built by itself last year.
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