Lyft Rolled Out 17 Percent Layoffs of its Workforce and is Furloughing Even More
In a recent regulatory filing, Lyft announced that it will lay-off 982 employees — 17 percent of the company’s workforce.
The rideshare company is doing so to reduce costs and adjust cash flows in the aftermath of the Wuhan virus pandemic.
Another cost-cutting measure that it’s implementing is the furloughing of 288 employees in addition to staggered reductions in pay. This comes accompanied with a 30 percent reduction in salaries for executive leadership, 20 percent for vice presidents, and 10 percent for all other employees that are exempt. Starting in May, the salary cuts go into effect for 12 weeks. Similarly, members of the Lyft board will give up 30 percent of their cash compensation for the second quarter of 2020.
“It is now clear that the Covid-19 crisis is going to have broad-reaching implications for the economy, which impacts our business. We have therefore made the difficult decision to reduce the size of our team,” CEO and co-founder Logan Green declared in a statement. “Our guiding principle for decision-making right now is to ensure we emerge from the crisis in the strongest possible position to achieve the company’s mission.”
According to company estimates, restructuring costs, which includes severance, are expected to be in the range of $28 million to $36 million. The majority of these costs will be incurred in the second quarter.
The filing came a day after Lyft’s competitor Uber is floating a plan to cut 20 percent of its workforce. In the midst of the sharp reduction of ride-hailing services, Lyft and Uber have sought alternative sources of revenue which focus mainly on transporting goods instead of people. In the concluding days of March, Lyft announced that it would start delivering meals and groceries for students and seniors in the U.S. In the meantime, Uber has been expanding its Uber Eats program to transport other goods in various markets around the world.
It’s clear that both companies are under significant pressure to become profitable. Uber pulled back its financial guidance for the year. Lyft followed in its footsteps a week later.
Due to economic uncertainty thanks to money printing and fiscal stimulus, there will likely be more announcements of layoffs from similar corporations.