Written By Ride-hailing giant Lyft announced on Tuesday that it would be laying off up to 30% of its staff in a company-wide restructuring plan to combat the impact of the COVID-19 pandemic on its business. The San Francisco-based company said that it was also furloughing additional employees and implementing pay cuts for remaining staff.
The cuts will affect Lyft’s operations and support teams across all of its offices worldwide, including its engineering, product, and design departments. The company expects to incur restructuring charges of up to $36 million in the second quarter of 2020, primarily related to severance and benefits costs.
Lyft’s decision comes as the ride-hailing industry has seen a significant decline in demand due to the coronavirus pandemic. With social distancing measures in place, fewer people are using ride-hailing services, and many drivers have stopped working due to health concerns. As a result, Lyft’s revenue dropped 20% to $955.7 million in the first quarter of 2020 compared to the same period last year.
The company had previously implemented cost-saving measures, including a hiring freeze and salary reductions for executives. However, those measures were not enough to offset the decline in revenue.
In a statement, Lyft co-founders Logan Green and John Zimmer said that the decision to cut jobs was not an easy one, but necessary to ensure the company’s long-term success. “We are moving forward with a smaller team, and as a result, there will be some reductions to our workforce,” the statement read.
Lyft is not alone in its struggle to survive the economic fallout from the pandemic. Its main rival, Uber, announced earlier this month that it would be cutting 14% of its workforce, or about 3,700 jobs, as part of a plan to reduce costs by $1 billion. Other companies in the sharing economy space, such as Airbnb, have also been forced to make significant cuts to their workforces.
The news of the layoffs at Lyft has been met with disappointment and concern from many employees and industry analysts. Some have criticized the company’s decision to cut jobs rather than exploring alternative cost-saving measures, such as reducing marketing expenses or delaying product launches.
However, others have pointed out that job cuts may be necessary for Lyft to survive the current crisis and emerge as a stronger company in the future. “We believe that the strategic reset and cost-cutting measures will help to position Lyft to emerge from the crisis stronger than ever,” said Daniel Ives, an analyst at Wedbush Securities.
Lyft has not provided details on which specific departments or roles will be affected by the layoffs, but the company has said that it will be providing severance pay, equity, and other benefits to impacted employees. The company also announced that it would be reducing executive salaries for the remainder of the year.
As the pandemic continues to impact the ride-hailing industry, it remains to be seen how Lyft and other companies in the space will navigate these challenging times. While cost-cutting measures such as job cuts may be necessary for survival, they also come at a significant human cost for impacted employees and their families. It will be up to Lyft and other companies to balance the need to protect their business with the need to support their workforce during this difficult period.
