Uber, the company that took the world by force and practically invented the market of ride hailing services, is going through a rough patch due to Covid 19 and subsequent restrictions. To cut its losses, the company is taking up other work, including collaborating with retail stores and pharmacies to deliver essential goods. However, these efforts might just have fallen short, as the company announced a plan to lay off about 3,700 employees from its platforms, which amount to roughly 14% of the total workforce.
Uber made the announcement in an SEC filing last week, where it highlighted an urgent need to “reduce its operating expenses in response to the economic challenges and uncertainty resulting from the COVID-19 pandemic and its impact on the Company’s business.” It also anticipates these layoffs to cost about $20 million, which will go towards providing severance packages and other termination benefits. It was not mentioned who exactly would become prey to this announcement, as nothing was explicitly mentioned.
However, things became a lot clearer when CEO Dara Khosrowshahi, in a company wide letter, stated that employees from CommOps and Recruiting better buckle up, for they are soon to be out of a job. He stated that with ride trips volume being down, the need for CommOps and in person support has also taken a hit. Moreover, with the hiring freeze from the company, the need for recruiters has become obsolete. Thus, they are the obvious choice for cutting losses, and will sadly be seeing a lot of layoffs.
In the same letter, Dara also noted the closure of 40% of Uber’s greenlight locations.
In the filing, Uber announced Dara’s plans to not take a salary for the entire year. “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. In connection with this decision, Mr. Khosrowshahi and the Company entered into a letter agreement, effective as of May 2, 2020,” the filing read.
The announcement comes a month and a half later after CEO Dara Khosrowshahi said that Uber had $10 billion of unrestricted cash and expected to end the year with $6 billion of cash and a $2 billion revolver. Markets, for obvious reasons, met the announcement with cheer. The news has already caused Uber’s stock to skyrocket.
In terms of its core ride-hailing business, things have slightly improved, specially in India, one of its largest markets. After partial lockdown withdrawal by the central government, Uber was given permission to operate in zones marked as orange and green, across the country. The thorn in that news however, was the fact all metros in the country — which account for a lion’s share of Uber’s revenues — were marked red.
