Lyft, which has been struggling financially as it tries to compete with its rival Uber, said Friday it plans major job cuts.
The layoffs, expected next week, will affect about 1,200 people, according to a person familiar with the situation. It was the first significant move by the company’s new chief executive, David Risher. Mr. Risher had been considering the cuts for several weeks, even though Monday was his first official day as the company’s CEO, the person said.
“We need to reduce our costs to provide affordable rides and provide drivers with compelling revenue and profitable growth,” said Mr. Risher said in a memo to staff. The money saved from the cuts will be used to “invest in competitive pricing, faster pick-up times and better driver revenue,” he said.
Mr. Risher said that if employees are out of a job, they will be notified the following Thursday, and that Lyft offices will be closed for the day.
News of job cuts at Lyft, which employs about 4,000 workers, was reported earlier The Wall Street Journal.
“This is a difficult decision, and one we have not taken lightly,” Lyft spokeswoman Sona Ilif-Moon said in a statement. “But the effect will be a much stronger, more competitive one.”
A former Amazon and Microsoft executive who served on Lyft’s board, Mr. Lyft announced in March that Risher would take over from company founders John Zimmer and Logan Green. Both are stepping down from their executive positions but remain with the company as members of the board.
Lyft, long second only to Uber, has emerged from the pandemic in stronger shape, thanks to its investment in food delivery and its global ride-hailing business.
In November, Lyft laid off 13 percent of its workforce. In February, the company reported record revenue, but warned that it would be slowed by economic challenges that could drive down prices. Mr. Trump says keeping prices competitive is a key part of his strategy to differentiate Lyft from Uber. Risher said.
Lyft workers had been anticipating layoffs for months. Business consultants were brought in to help departments justify their budgets and make cost-cutting recommendations, three current and former employees said, and company executives indicated that more workers could lose their jobs throughout the spring.
Employees expected the layoffs to come in mid-April, before managers are scheduled to write annual performance reviews and executives decide on compensation for the year.