Disney Co. Says Profits Hurt by Dip in Air Travel : Entertainment: Shareholders told theme park attendance should pick up soon. Directors increase the dividend.

ANAHEIM — Walt Disney Co. told shareholders Tuesday that a drop in air travel, caused by the recession and Persian Gulf War, has hurt attendance at its theme parks and will adversely affect earnings.

Chairman Michael D. Eisner admitted that theme park attendance has been “crummy.” But company officials still were upbeat for the long term.

“Attendance is not great, and it started not being great on Aug. 2 with the fears of war and recession,” Eisner told shareholders, referring to the day Iraq invaded Kuwait.

But he said reservations for Disney’s parks and resorts, particularly in Florida, have increased recently. “It started to explode once the war ended,” he said.

Despite the tough economic climate, Disney said it was raising its quarterly dividend to 17.5 cents a share from 14.5 cents. The company’s last dividend increase was in February, 1990, when it was increased from 12 cents.

Judson C. Green, Disney’s chief financial officer, said that while there would be a short-term impact on income because of the slump in tourism, the company is well-positioned for the future. “We firmly believe we must focus on the long term,” he said.

Eisner told the more than 11,000 shareholders attending that Disney is expected to continue its steady revenue growth, from $5.8 billion in fiscal 1990 and $6 billion this fiscal year.

First-quarter results, however, showed that the theme park revenues were surpassed by the company’s film division for the first time in 26 years. The company also showed a slight drop in operating revenues overall for the first quarter of fiscal 1991, ended Dec. 31, 1990. Its earnings dropped 2% in the quarter, from $174 million to $170 million.

Eisner and President Frank G. Wells talked glowingly of the company’s upcoming movies, television programming and the prospects for Euro Disneyland opening in April, 1992.

The meeting took place next door to Disneyland, but relatively little was said about the theme park, though Eisner did announce two new attractions.

Eisner did not give any hint about the company’s plans for the expansion of Disneyland. The company plans to build a new park in either Long Beach or Anaheim, and Eisner said that decision will be made by the end of the year.

“There’s so many things to consider,” he said in an interview after the meeting. “It is so complicated. We have to think about what works best for us and the economics and how the community feels about this project.

“There is no simple factor that will tilt our decision one way or another.”

He reiterated that the company is designing two new rides for Disneyland based on the successful film “Who Framed Roger Rabbit.” Another official said they would open in 1993.

Wells also vowed to renovate the aging Tomorrowland. “It doesn’t live up to its name now, and we don’t intend to allow that to go along much longer,” he said. Eisner added jokingly that “the Mission to Mars will no longer be there,” a reference to an antiquated ride that has come to stand for how dated Tomorrowland has become.

In the further cloning of attractions from one Disney park to the next, Eisner said the company will build a Matterhorn bobsled ride and a Splash Mountain at Walt Disney World.

Eisner said foreign markets remain major targets for expansion. Disney comic books were snapped up the first day they were issued in the Soviet Union, Disney Club television shows are a hit in several foreign countries, and Japan remains so in love with Tokyo Disneyland that one day the park sold more pairs of mouse ears than there were visitors in the park.

Sales of Disney-licensed consumer products have grown tremendously, he said. Mickey’s Kitchen, a fast-food restaurant concept being tried at a shopping mall in Montclair, has been a success, and another store will open in Chicago. The company is also opening new Disney stores such as the one in South Coast Plaza in Costa Mesa, Eisner said.