Lyft said it will lay off nearly 1,000 employees, or about 17 percent of its workforce, as the novel coronavirus pandemic continues to decimate the already cash-strapped ride-hailing industry. The layoffs, which the company announced in a filing with the Securities and Exchange Commission on Wednesday, come as the company’s larger rival, Uber, is reportedly also contemplating steep cuts of its own.
Lyft says it will terminate 982 employees, which it anticipates will cost between $28 million to $36 million in “restructuring and related charges primarily related to employee severance and benefits costs,” the filing states.
The company says it will also furlough 288 employees and reduce salaries for exempt employees for a three month period. Lyft’s executive team will take a 20–30 percent pay cut, while all other non-furloughed employees will see their salaries reduced by 10 percent. Members of Lyft’s board of directors have voluntarily agreed to forgo 30 percent of their cash compensation for the second quarter of 2020.
Lyft recently waded into deliveries for the first time in an attempt to generate a new revenue stream. The company is also providing free and discounted bike-share passes and e-scooter rides to essential workers in half a dozen cities.
Of course, Lyft’s ride-sharing business has plummeted as health officials instruct people to avoid unnecessary travel. The company’s rides business has dropped by 75 percent, according to The Information. Lyft’s revenue after paying drivers is likely to be less than $150 million a month currently, down from about $260 million a month during the first quarter of last year, the publication reports. Uber has also seen a huge drop in demand and sales.
Update April 29th, 2:34 pm ET: A spokesperson for Lyft said in a statement: “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. 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.”