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Euro Disney on Wednesday announced a reduction in full-year net losses helped by a successful debt-for-equity swap, but rising labour costs thwarted the theme-park operator’s efforts to return to the black.

High interest payments on debts incurred when its first Paris park was constructed have prevented Euro Disney from generating regular profits.

However, a €1.7bn ($2bn) financial reorganisation released the company from some of its debt obligations. “There was a significant conversion of debt to equity by the Walt Disney Company which reduced our interest expense,” said Jeff Speed, finance director.

This was the main factor in the narrowing of net losses from €145.2m to €94.9m, he added. Net losses for the year were €94.9m compared with €145.2m last time.

Attendance at Euro Disney’s two Paris parks was flat at 12.3m, despite the group running in spite of a new programme of seasonal events aimed at attracting visitors in off-peak periods. “We had a difficult third quarter,” said Mr Speed,
adding that the first half had been “solid”.

He expressed confidence that the the group’s strategy of seasonal events was working. “Our third quarter tends to be difficult. But over the next two years we will be opening brand new attractions [in that period] so we should see some growth.”

Euro Disney has high hopes for its Buzz Lightyear Laser Blast attraction, which it plans to will launch in 2006. The ride has been a big hit at other Disney parks.

Occupancy at the hotels next to the Paris parks had risen to their highest level for three years.

Turnover rose 3 per cent to €1.08bn, reflecting increased spending by park visitors.

However, rising revenues were offset by reduced spending by hotel guests and increasing labour costs.

Labour costs rose 7 per cent to €427.3m. “We’re talking to the unions and trying to get more flexibility in how we pay for our labour,” said Mr Speed. “We’re looking to stabilise labour costs.”

In May, Euro Disney parted company with Andre Lacroix, its chief executive. Karl Holz, the group’s new chief executive, on Wednesday said Euro Disney’s “fundamental indicators allow us to be confident in the future”.

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