Disney Will Abandon Ship and Bail Out of Long Beach : Tourism: The company will end its lease of the Queen Mary and Spruce Goose, both money losers. A waterfront development proposal also is dead, it says.

The Walt Disney Co. announced Friday that it is pulling out of its Long Beach operation at the Queen Mary and Spruce Goose, throwing the future of the famed tourist attractions in doubt and extinguishing the city’s hopes that Disney would develop part of the local waterfront.

Disney’s departure comes on the heels of its decision last December to abandon plans for building a major theme park on the Queen Mary site. While the company instead chose Anaheim for the project, local officials had still hoped that Disney would develop a less ambitious entertainment complex in Long Beach.

Those dreams were bolstered when Disney started negotiations with the city in January to extend its lease option for another two years on the Queen Mary ocean liner, the Spruce Goose--Howard Hughes’ “Flying Boat”--and surrounding property.

But Friday, the company ended a week of silence with the news that it would end its lease, give up development rights for the property and stop operating the attractions on Sept. 30.

“The Queen Mary has not been a profitable operation as a tourist attraction and has proved to be a less than viable investment,” the company stated in a press release.

Several city officials said that the Long Beach Harbor Department will continue to operate the Queen Mary--which employs about 1,100 people--in the short term. But in the long term, the attraction’s fate is unclear.

Owned by the city and moored in Long Beach since 1967, the ship has been a big money loser for the city as well as for a string of private operators. Disney said it lost nearly $8 million on the ocean liner and the Spruce Goose last year and has been spending $7 million to $8 million a year on maintenance and repairs.

Nonetheless, the handsome 1936 passenger liner is an affectionately regarded local landmark. While expressing disappointment in Disney’s decision, Mayor Ernie Kell maintained that there is still hope for the Queen Mary. “We’re going to have to look around for another operator. . . . The Queen Mary, in my opinion, will be staying.”

Harbor Commissioner Alex Bellehumeur also said the port will strive to keep the ship afloat. “The port is going to do everything it can to keep the Queen Mary. The Queen Mary is the signature for the city. We sure as heck don’t want to lose it.”

Others were not so enthusiastic. “I do not see where there could be a future for the Queen Mary in Long Beach,” said Harbor Commissioner David L. Hauser. Still, he predicted that the port would be willing to operate the ship for another year or two--because of the jobs it provides and the approximately $1 million a year in taxes it pours into city coffers.

Steve R. Dillenbeck, executive director of the Harbor Department, said several companies in recent weeks have contacted the city about the ocean liner, some with proposals that would both leave the ship in Long Beach and others that would move it.

The future of the Spruce Goose, owned by the nonprofit Aero Club, is also cloudy. The Harbor Commission must now decide if it wants to work out another agreement to keep the seaplane in Long Beach or let it go.

In ending its lease, Disney is not only walking away from the Queen Mary, it is also turning its back on any Long Beach development.

When the company chose Anaheim over Long Beach last year as the site of its second Southern California theme park, Disney officials said they might still be interested in developing a smaller attraction on the property.

But Erwin Okun, a senior vice president of Disney, said Friday that the company concluded that even a smaller-scale project would not be worthwhile. “There was nothing viable,” Okun said. “We did not have an alternative that was appealing or could be developed in a reasonable period of time.”

Port officials said Disney representatives told them in a meeting Friday that the company had so many other projects in the works that it would not have been able to turn its attention to a Long Beach development for several years.

Disney’s exit is yet another blow to Long Beach, which has recently suffered a string of economic setbacks. The recession has battered tax revenues, the Navy is leaving town in a few years and thousands have been laid off at the local McDonnell Douglas aircraft plant.

As the news of Disney’s decision circulated, there was lots of finger-pointing by council members.

“I can’t believe the lack of leadership and vision that cost us this quality corporation,” lamented Councilman Jeffrey A. Kellogg, blaming both the harbor commissioners and the mayor for not finding a way to keep Disney.

“The process was botched,” said Councilman Warren Harwood. And Councilman Evan Anderson Braude said he saw no reason why “an agreement could not have been reached. Highly questionable negotiation tactics (by the port) were apparently employed, and they appear to have backfired.”

Harbor commissioners, who oversaw the negotiations, defended their efforts.

“I think possibly some of the councilmen do not have all the facts,” said Commissioner Roy Hearrean, one of the negotiators. “We all tried very hard to make the deal work with Disney. Disney’s reasons for leaving were not the negotiations.” Rather, he said, Disney pulled out because it would have taken too long to develop a local attraction.

Hauser said it is absurd to speak of losing Disney because the company had never committed itself to doing anything with the Queen Mary site.

“We never had anything . . . Disney wanted an option extended for a two-year period, promising nothing.”

Times staff writer Chris Woodyard contributed to this story.