Uber to lay off 3,700

Uber will lay off 3,700 employees as it suffers Covid-19 blow.

Lauren Feiner reported the news for CNBC:

Uber said Wednesday it will lay off 3,700 employees and that CEO Dara Khosrowshahi will forgo his base salary for the rest of the year.

The layoffs to its customer support and recruiting teams represent about 14% of its 26,900 employees, based on Uber’s most recent headcount.

Khosrowshahi made $1 million in base salary in 2019 but gained the vast majority of his compensation from bonuses and stock awards.

The moves were announced in a filing with the Securities and Exchange Commission.

Uber’s stock fell as much as 4% Wednesday but ended the trading day down 0.9%.

Uber has been hit hard by the coronavirus pandemic, which has crushed the travel industry because of lockdowns to stop the spread of the virus. Uber’s global gross bookings are down 80%, according to a report from The Information last month. Investors will get a greater sense of the impact on Thursday when Uber reports earnings.

The AP’s Cathy Bussewitz wrote:

“Consumers are going to be more worried about getting into Ubers and Lyfts than into taxis, and they’re going to be more worried about going to who-knows-who’s house or apartment under Airbnb than they will be about going to a Hilton or Holiday Inn,” said Erik Gordon, a professor at the University of Michigan Ross School of Business. “If you look at lodging, if you look at rides, the sharing platforms face a bigger customer confidence hurdle than the traditional players, probably for the first time in years.”

Ride-hailing companies were already struggling to demonstrate a path to profitability well before the pandemic began. And no one knows whether the companies that rely on sharing backseats and living rooms will survive after the pandemic is over.

Brian Heater from TechCrunch reported:

In a letter to staff, CEO Dara Khosrowshahi noted that the cuts will come from from community operations and recruiting. Uber will also be closing around 40 percent of its Greenlight locations — used for in-person driver assistance.

“With the reality of our rides trips volumes being down significantly, our need for CommOps as well as in-person support is down substantially,” he writes. “And with our hiring freeze, there simply isn’t enough work for recruiters.”

Khosrowshahi has also agreed to waive his own base salary for the rest of 2020. 

“In connection with the foregoing, Dara Khosrowshahi, the Company’s Chief Executive Officer, after consultation with the Board of Directors, agreed to waive his base salary for the remainder of the year ending December 31, 2020,” the company writes in the filing. “In connection with this decision, Mr. Khosrowshahi and the Company entered into a letter agreement, effective as of May 2, 2020.”