Uber CEO Dara Khosrowshahi. Picture: REUTERS/ANDREW KELLY
Uber CEO Dara Khosrowshahi. Picture: REUTERS/ANDREW KELLY

San Francisco — Uber Technologies is slashing another 3,000 jobs and closing dozens of offices, the company said on Monday, part of a series of dramatic moves intended to shore up a business that has been gutted by the coronavirus.

The latest round of job cuts come on top of the dismissal of 3,700 employees in customer support and human resources earlier in May. The staff reductions now represent about 25% of the total workforce. In an e-mail to staff on Monday, CEO Dara Khosrowshahi stopped short of saying that the jobs would be the last of the Covid-19 casualties.

The cuts at the San Francisco-based ride-hailing giant are part of a broader dialling back of ambition for a company that once promised to usher in a self-driving revolution and popularise flying cars. In the Monday e-mail, Khosrowshahi said Uber will stop work on several of its side projects as the company reorients itself about its two core businesses: ride hailing and food delivery.

More speculative units — including the ideas generator Uber Incubator, the artificial intelligence division AI Labs and a job-matching service called Uber Works — will be shuttered, Khosrowshahi wrote. Uber also will close or consolidate 45 of the several hundred offices it operates globally.

“We must establish ourselves as a self-sustaining enterprise that no longer relies on new capital or investors to keep growing, expanding and innovating,” Khosrowshahi wrote to employees, while dismissing the idea that the moves were done to appease investors. Uber shares initially rose as much as 9% on the news on Monday, but by 3pm in New York were up only about 3%.

As a result of the changes, Uber will incur $175m to $220m in charges, mostly in the second quarter, according to a securities filing on Monday.

Key regions and businesses

Since the pandemic began, Uber has been moving to focus its efforts on a few key regions and businesses. The company shuttered a half-dozen food delivery operations, offloaded its cash-burning electric bike group to scooter start-up Lime and permanently closed 40% of its driver stations. One of the offices that will close is in Singapore, where Uber had already sold its Southeast Asia business to local rival Grab in 2018.

Social distancing and shelter-in-place orders stemming from the pandemic have hobbled so-called sharing economy businesses, as customers find themselves with few places to travel, and a new reticence to use the cars or homes of strangers. Lyft, the main alternative to Uber in North America, is cutting about 17% of staff, furloughing more and reducing salaries. Airbnb is cutting a quarter of its workforce.

Uber, which for years burnt cash in exchange for user growth, faced challenges even before the pandemic. Though Uber’s main ride-hailing division is now profitable, the food delivery operations still lose money and other bets such as autonomous vehicles and air taxis have yet to be proven.

The company reported its first-ever decline in rides during the first quarter, and pushed back a goal of being profitable to next year, instead of at the end of 2020. To achieve that metric, Khosrowshahi said he planned $1bn in cost-cutting measures, including headcount, real estate and other reductions.

But even as it makes efforts to cut costs, Uber is in talks to acquire GrubHub, a purchase that would make Uber the dominant player US food delivery market. Khosrowshahi told employees on Monday that though Uber still loses money on food delivery, it was “the next enormous growth opportunity”, an opinion reinforced by surging demand for takeout during lockdown.

A tie-up with GrubHub could lead to significant savings in a highly competitive industry, but has raised antitrust concerns among leading legislators.


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