Uber Lays Off 3,700; Airbnb Cuts 1,900 As People Rethink Sharing

In a world where the coronavirus pandemic has turned social distancing into a new way of life, companies whose business models bank on people's willingness to share their personal space are now struggling.

Uber said Wednesday it's cutting 3,700 full-time workers, or about 14% of its workforce, as people fearful of infection either stay indoors or try to limit contact with others to minimize risk when they do venture out. Rival Lyft and home-sharing service Airbnb have also announced cuts because of falling usage.

The layoffs and related costs like severance will cost about $20 million for Uber, which had already imposed a hiring freeze.

The San Francisco-based company has offered up to 14 days of financial assistance to drivers and delivery workers who were diagnosed with the COVID-19 disease, or placed in quarantine.

Those ride-hailing drivers still on the road are trying to avoid infection and patch together enough fares to put dinner on the table even as ridership plummets.

Rival Lyft announced last month it would lay off 982 people, or 17% of its workforce in the face of sinking ridership. The San Francisco company expects to spend $28 million to $36 million on expenses related to employee severance and benefit costs.

Both Uber and Lyft are trying to conserve cash so they can weather the pandemic's fallout, in part by emphasizing deliveries of food and other goods.

Lyft, which in the past touted its singular focus on transportation, started a temporary service called "Essential Deliveries" last month to deliver goods such as groceries to food banks and senior centers.

Uber is expanding Eats, its restaurant delivery service, into 20 international markets this year.

The psychology of riders' decision-making is also shifting. Ride-hailing companies were banking on people deciding they would rather hitch a ride than own a car, a belief that has changed for some consumers during the pandemic. Riders also will be making decisions about what's safest, and would have to trust that a shared vehicle less risky than a bus or train.

Meanwhile, Airbnb is slashing staff as the thought of opening living spaces to strangers begins to feel like an anachronism.

On Tuesday, the company announced it was cutting a quarter of its workforce, some 1,900 people.

The San Francisco-based company expects its revenue to drop by more than half this year.
It was not so long ago that Airbnb was poised to cash in on a soaring stock market with its highly anticipated public offering. But with the market now reeling and few people looking to anywhere but home, Airbnb is reportedly racking up millions of dollars in losses.

When consumers eventually resume traveling, Airbnb CEO Brian Chesky anticipates they will spend less and stay closer to home. Earlier this year, after the company told guests they could cancel their stays without penalties, it agreed to pay furious hosts $250 million to make up for some of their lost income.

—CATHY BUSSEWITZ, AP Business Writer