COVID-19 is having an obvious negative impact on the ride-hailing industry, with Uber and Lyft reporting huge losses.
Uber has announced it’s being forced to cut 3,700 employees amid the crisis, accounting for around 14 percent of its workforce. The redundancies will predominantly hit Uber’s recruiting and CommOps teams.
“With people taking fewer trips, the unfortunate reality is that there isn’t enough work for many of our front-line customer support employees,” Uber said in a statement.
“Since we don’t know how long a recovery will take, we are taking steps to bring our costs in line with the size of our business today. This was a tough decision, but it is the right one to help protect the company’s long-term health and ensure we come out of this crisis stronger.”
According to a 8-K filing, Uber CEO Dara Khosrowshahi is waiving his base salary until the end of the year in order to protect as many jobs as possible.
Lyft, meanwhile, cut 982 jobs and furloughed a further 288 last week – accounting for around 17 percent of its workforce. Remaining employees have faced pay cuts: 30 percent for executives, 20 percent for VPs, and 10 percent for all other employees.
The ride-hailing business of Lyft is smaller than Uber’s, but the company says its ride volume hit a bottom in the second week of April. In that week, rides dropped 75 percent over the same time last year.
Lyft’s Q1 financials are quite solid given the situation, although we’d expect the real damage to show in the company’s Q2 report. The company’s $955.7m revenue in Q1 2020 is an increase of 23 percent over the previous year. Lyft ended the first quarter with 21 million users, a three percent increase over last year.
“While the COVID-19 pandemic poses a formidable challenge to our business, we are prepared to weather this crisis,” said Logan Green, co-founder and chief executive officer of Lyft. “We are responding to the pandemic with an aggressive cost reduction plan that will give us an even leaner expense structure and allow us to emerge stronger.”
“Our competitive resilience and commitment to our culture and values will put Lyft in the best position to deliver on our mission of improving people’s lives with the world’s best transportation.”
Cities around the world are beginning to cautiously reopen as COVID-19 deaths and infections decline. However, it may be some time before a return to any kind of normal – especially for shared travel services.
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