Lyft announced Wednesday it will lay off 17 per cent of staff, and furlough five per cent, as its business collapses amid coronavirus lockdowns and slowdowns. That amounts to roughly 980 people axed, and 290 on pause with no pay.
And we're talking operations staff, not the folks who pick up and drop off users of its dial-a-ride app.
After US states ordered everyone to remain home where possible to curb the COVID-19 virus's spread, the number of Lyft rides has plummeted. As a result, the San Francisco upstart has decided to cut into its 5,800-strong workforce to “reduce operating expenses and adjust cash flows in light of the ongoing economic challenges resulting from the COVID-19 pandemic,” according to a filing with America's financial watchdog, the SEC.
The app maker expects the headcount cuts will cost somewhere between $28m to $36m in severance pay and associated bills, and the impact will be evident in its second-quarter earnings later this year. Remaining employees will have their salaries reduced for 12 weeks starting from May. Top execs should expect a 30 per cent decrease, 20 per cent for vice presidents, and all other employees will have a 10 per cent reduction.
Lyft’s board members also voluntarily agreed to give up 30 per cent of their “cash compensation” for Q2, according to the filing submitted by its chief financial officer, Brian Roberts.
The Register has asked Lyft for comment. Lyft shares are trading up a few per cent at the moment, at $34.50 apiece.
Lyft isn’t the only ride-sharing startup to be hit by the coronavirus pandemic; its main competitor Uber is thinking about laying off 20 per cent of its staff, according to whisperings in The Information. That figure roughly translates to more than 5,000 employees. Its long-time CTO Thuan Pham has also resigned as the company mulls the move. We have also asked Uber for comment too. Uber shares are also up at $31.64 apiece. ®