Coronavirus: Uber announces drastic cuts to secure its future

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Uber driver

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Uber has announced a drastic action plan to cut its business as losses soar during the pandemic closure.

The company said it would cut 3,000 more jobs, bringing the total reductions of the past few weeks to a quarter of the workforce.

It also closes or consolidates more than 40 offices and eliminates units such as its artificial intelligence laboratory.

The head of the firm said that these measures were necessary “to secure our future”.

“We need to establish ourselves as a stand-alone business that no longer depends on new capital or investors to continue to grow, develop and innovate,” wrote general manager Dara Khosrowshahi in a letter to staff.

“We must take these difficult steps to stay strong on our own feet, to secure our future and continue our mission. “

80% decrease

Even before the pandemic, Uber was facing enormous losses. But its challenges have multiplied as activity plunged during the pandemic.

The number of Uber rides dropped 80% last month at the height of the blockages in the United States and Canada. Meanwhile, although its Uber Eats food delivery activity has surged, it remains in deficit.

Earlier this month, Uber announced it would cut 3,700 workers and warned of possible further cuts. The workforce cuts do not include drivers, which Uber considers to be independent contractors.

The affected offices include hubs in San Francisco and Singapore, which will begin to close over the next year as the company chooses a new regional headquarters.

Uber said it would reorganize its remaining staff and cut spending on areas that are not part of its core business of personal transportation or food delivery, including its AI labs.

Combined, the actions are expected to cut spending by $ 1 billion, the company said.

Wider impact

Uber’s actions are the latest sign of the virus’s continued economic impact and efforts to control it.

While some places have begun to relax the restrictions, many companies – particularly those in the travel industry – have warned that it will take time for public confidence in the safety of many daily activities to be restored.

Uber rival Lyft has also announced major job cuts, as have airlines, hoteliers and booking platforms like Airbnb.

“Given the dramatic impact of the pandemic and the unpredictable nature of any possible recovery, we are focusing our efforts on our main mobility and delivery platforms and resizing our business to match the realities of our business”, said Mr. Khosrowshahi.

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