Lyft to cut 17% of workforce, furlough more, reduce salaries due to coronavirus
Lyft Inc. said it will eliminate the jobs of almost 1,000 employees across the company, or about 17% of its workforce, responding to plummeting demand for rides and cratering revenue in the economic slowdown caused by the coronavirus pandemic.
The San Francisco-based company also will furlough about 5% of employees who handle operations that have been suspended during the virus outbreak and cut pay for all employees for the next three months, Lyft said Wednesday in a companywide email. The company also said it will shut down scooter operations in Austin, Texas, and in Oakland and San Jose, California, to cut back on maintenance costs.
“We are taking these actions after exhausting all other opportunities to make deep budget cuts across the business," Chief Executive Officer Logan Green said in an email with the subject line “Hard decisions" announcing the cuts and inviting the company’s more than 5,000 employees to an all-hands video conference. The conference lasted only six minutes, said one employee who attended and asked not to be identified because the meeting wasn’t public. The employee said the comments seemed scripted, and the tone was predictably somber.
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Unlike Uber Technologies Inc., which operates globally and has seen an uptick in its food delivery service during the pandemic, Lyft has had few bright spots. It only operates in North America, which is widely locked down, and relies entirely on transportation revenue. California is Lyft’s largest market, leaving the company in a particularly vulnerable position. Los Angeles is still asking people to stay at home, and this week, six Bay Area counties extended shelter-in-place orders through the end of May. Ride demand is down by as much as 80% in some hard hit regions, the company said.
Both ride-hailing companies are unprofitable, and the pandemic has raised major questions about their promises to turn the businesses around as soon as this year. Both companies withdrew financial guidance this month.
Lyft co-founders Green and John Zimmer announced last month they would forfeit their pay through the end of June, directing the money to support drivers instead. The company said Wednesday that it would slice salaries for the remaining 4,000 or so employees for the next three months, with cuts ranging from 30% for the executive leadership team, to 10% for employees below the vice president level. Hourly employees won’t be affected.
Lyft expects to spend $28 million to $36 million on costs related to the restructuring, the majority of which will hit the company during the second quarter of 2020, according to a securities filing Wednesday. The company, which ended last year with more than $2.8 billion in cash, is scheduled to report financial results for the first quarter on May 6.