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Coronavirus: Uber announces drastic cuts to secure its future

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Uber driverImage source, Getty Images

Uber has announced a drastic action plan to scale back its business as its losses balloon amid pandemic lockdowns.

The firm said it would cut 3,000 more jobs, bringing the total reductions in recent weeks to a quarter of the workforce.

It is also closing or consolidating more than 40 offices and winding down units such as its artificial intelligence lab.

The head of the firm said the moves were necessary "to secure our future".

"We must establish ourselves as a self-sustaining enterprise that no longer relies on new capital or investors to keep growing, expanding and innovating," chief executive Dara Khosrowshahi wrote in a letter to staff.

"We have to take these hard actions to stand strong on our own two feet, to secure our future and to continue on our mission."

80% drop

Even before the pandemic, Uber was grappling with huge losses. But its challenges have multiplied as activity plunges during the pandemic.

The number of Uber rides dropped 80% last month at the height of the lockdowns in the US and Canada. Meanwhile, although its Uber Eats food delivery business has surged, it remains loss-making.

Earlier this month, Uber announced it would cut 3,700 staff and warned of possible additional reductions. The workforce cuts do not include drivers, whom Uber considers independent contractors.

The affected offices include hubs in San Francisco and in Singapore, which will start closing over the next year as the firm selects a new regional headquarters.

Uber said it would reorganise its remaining staff and cut back spending in areas that are not part of its core personal transport or food delivery businesses, including its AI Labs.

Combined, the actions should reduce spending by $1bn, the company said.

Wider impact

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

While some places have started to ease restrictions, many companies - especially those in the travel industry - have warned it will take time for public confidence in the safety of many everyday activities to be restored.

Uber's smaller rival, Lyft, has also announced significant job cuts, as have airlines, hoteliers and booking platforms such as Airbnb.

"Given the dramatic impact of the pandemic, and the unpredictable nature of any eventual recovery, we are concentrating our efforts on our core mobility and delivery platforms and resizing our company to match the realities of our business," Mr Khosrowshahi said.