Lyft announced in a regulatory filing today that it will cut 982 jobs, or 17% of the company’s workforce, to reduce costs and adjust cash flows in the wake of the coronavirus pandemic.
Other cost-cutting measures include plans to furlough 288 employees, as well as sliding-scale reductions in pay, with a 30% cut in salaries for executive leadership, 20% for vice presidents, and 10% for all other exempt employees. The salary cuts are effective for 12 weeks beginning in May. Members of the board, meanwhile, will give up 30% 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 said 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.”
The company estimates restructuring costs, including severance, to be in the range of $28 million to $36 million, the majority of which will be incurred in the second quarter.
The filing comes a day after The Information reported that rival Uber is discussing plans to cut around 20% of the its workforce.
Amid the sharp decline in ride-hailing services, Lyft and Uber both have looked to alternative revenue sources focused primarily on transporting goods instead of people. At the end of March, Lyft, which had not previously been in the food-delivery business, announced it would begin delivering meals and groceries for students and seniors in the US. Uber, meanwhile, has been expanding the model of its Uber Eats business to deliver other kinds of goods in select markets around the world.
But it’s certain both companies are under much more pressure now to find a path to profitability. Uber withdrew its financial guidance for the year shortly after the lockdowns began; Lyft followed suit a week later.
At the time of this publishing, Lyft’s shares were up 4% to $34.06.