Idled Uber is laying off 3,700 staffers, or 15% of its workforce
Uber is laying off 3,700 employees in its customer service and recruiting departments as the number of ride-sharing passengers have plunged during the coronavirus pandemic. The cuts hit about 15% of the company's full-time staff.
Uber has also instituted a hiring freeze, the company said in a regulatory filing on Wednesday, and CEO Dara Khosrowshahi will forgo his salary for the rest of the year. Uber expects to spend roughly $20 million on benefits owed to the laid-off employees.
Uber is preparing itself now for the harsh reality that it won't recover all its customers once the pandemic ends, said Wedbush Securities analyst Dan Ives.
"There's so much uncertainty when it comes to this virus," Ives said. "There are some who will not get into a car for the next one to three years. There's not going to be that comfort level with getting back into ride sharing for some until there's a vaccine."
Uber has made other cost-saving moves aside from layoffs, including slashing its marketing budget, Ives said. The company is just one example of the larger gig economy "taking a gut punch in the coronavirus environment," he said.
Airbnb cut 1,900, or about 25% of its workforce this week. CEO Brian Chesky said in a memo to employees released Tuesday that the company's 2020 revenue will likely be less than half of last year's figures.
"We are collectively living through the most harrowing crisis of our lifetime, and as it began to unfold, global travel came to a standstill," Chesky said in the memo. "Airbnb's business has been hit hard."
Uber rival Lyft laid off 982 employees, or 17% of its workforce, in April. Lyft also furloughed about 288 employees and reduced the salaries for its vice presidents and executives by 20% and 30%, respectively.
Uber began sending disinfectant wipes to its drivers in early March, around the time COVID-19 cases began rising nationwide. The company also suspended the accounts of drivers and passengers who caught COVID-19 or were known to have had contact with someone who had the disease.
Uber on Monday said it will soon require passengers and drivers to wear face coverings in certain markets.
Uber drivers have seen a decline in customers as many Americans remain indoors under government stay-at-home orders. More specifics on ridership and profits should emerge Thursday during Uber's first-quarter earnings report.
Uber's stock has fallen almost 11% since the beginning of March.
Aimee Picchi contributed to this report.