Uber is laying off 3,700 and signals more cuts to come

The reductions will affect 14% of staff around the world, mainly those in support and recruiting.

Uber is laying off 3,700 and signals more cuts to come

Uber Technologies Inc. will eliminate 3,700 jobs and permanently close 180 driver service centers, the first in a series of cost-cutting measures to be announced in the next two weeks as a response to the coronavirus pandemic.

The reductions will affect 14% of staff around the world, mainly those in support and recruiting, Dara Khosrowshahi, the chief executive officer, wrote in an email to employees Wednesday. Ridership is down significantly, and the company is maintaining a freeze on hiring, Khosrowshahi wrote in the email, which was reviewed by Bloomberg.

Of the more than 450 driver centers Uber operates worldwide, 40% will shut down. The locations, called Greenlight Hubs, are used to sign people up to drive for Uber, teach them how to use the app and address issues that arise on the job. In March, as the virus was spreading in North America, Uber said it was temporarily closing all hubs in the U.S. and Canada.

Khosrowshahi signaled that more “difficult adjustments” would be put forth in the next two weeks. “Days like this are brutal,” he wrote.

This sort of painful day is becoming commonplace. Tech companies have eliminated more than 38,000 jobs in the past two months, according to Layoffs.fyi, which tracks the job market. Lyft Inc., the main alternative to Uber in North America, said last week it was dismissing 17% of staff, furloughing more and reducing salaries. Their longtime peer in the sharing economy, Airbnb Inc., said Tuesday the company was cutting a quarter of its workforce.

The job losses are sudden for many, but at Uber, they may seem drawn out. After a disappointing initial public offering a year ago, Uber dismissed more than 1,000 employees over multiple rounds of cuts that extended from July to what Khosrowshahi described as a “last wave” in October. They were part of a drive toward profitability, which was expected to arrive by the end of this year.

Uber has seen its landscape shift considerably since then. It instituted a hiring freeze in March, withdrew its financial forecast and wrote down some $2 billion worth of investments in April and said Monday it would shutter food delivery operations in seven countries.

As of May 2, Khosrowshahi waived his salary for the remainder of the year, the company said. In 2019, he was eligible for a salary of $1 million and a bonus of $2 million, according to a securities filing. Uber is scheduled to report first-quarter financial results Thursday.

The challenges posed by the virus could be matched by a new one this week from Uber’s home state. California sued Uber and Lyft Tuesday for allegedly flouting a state law designed to give gig-economy workers the benefits of employees. If the case is successful, the companies could be on the hook for substantial new costs that further jeopardize their business models.

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Reopening of Shanghai Disneyland is a proving ground for pandemic-era theme parks

The park, and the larger China market, is one of Disney's few hopeful spots.

Reopening of Shanghai Disneyland is a proving ground for pandemic-era theme parks

The Walt Disney Company is in dire straits. Worldwide, the entertainment goliath’s resorts and theme parks are closed, production on upcoming releases are on hold, and advertising revenues have plunged as the coronavirus pandemic takes its toll.

According to the company’s earnings for the fiscal second quarter, announced Tuesday, COVID-19 cost Disney $1.4 billion in operating income. But a bright spot is emerging in China where Shanghai Disney Resort—the latest of Disney’s resorts—is preparing to reopen.

“We are seeing encouraging signs of a gradual return to some semblance of normalcy in China,” Chief Executive Officer Bob Chapek said on a conference call with investors Tuesday, announcing that the Disney resort in Shanghai will reopen on May 11, after more than three months of closure.

The happiest place on Earth

As China’s official count of new coronavirus cases remains low, the government is actively encouraging a return to normalcy. Authorities, who initially spurred workers to return to factories in March, are now urging consumers to return to shops and tourist sites, too. Cities in more than two-thirds of China’s provinces have issued cash vouchers to residents to spend on consumer goods and “cultural activities.”

Notably, Shanghai has yet to deploy a voucher scheme, so the reopening of its flagship theme park is a bet that consumers are ready to resume spending even without incentives.

Unlike the Shanghai resort’s grand opening in 2016, when crowds of tourists mobbed the park, Shanghai’s pandemic-era reopening will be a timid affair.

In line with government regulations, visitors will have to wear masks, submit to temperature checks and present the ubiquitous health code apps before entering the park. Local authorities have told the park it can only operate at 30% capacity, too.

According to Chapek, normal attendance at Disneyland Shanghai reached 80,000 guests per day. Under the new restrictions, that number would drop to 24,000, but Chapek says the park will initially target an even lower number, gradually increasing attendance to the 30% threshold.

“We will take a phased approach with limits on attendance, using an advanced reservation and entry system, controlled guest density using social distancing and strict government required health and prevention procedures,” Chapek said.

It’s a small world, after all

The reopening of Disneyland Shanghai could be a test run for Disney’s other resorts, all of which remain shut. Disneyland Hong Kong shut its doors a day after Shanghai on Jan. 26. Tokyo Disneyland held out until February while, in the U.S., Disney parks remained open until mid-March.

Hong Kong’s loss-making Disneyland—the smallest of the conglomerate’s six “castle lands”—has reportedly conducted test runs of how social distance queueing would work at the park. The official task force in charge of organizing a return to normal in Orange County, Florida, also issued guidelines on how Walt Disney World could reopen but when remains a mystery.

Disney’s theme parks fall under the company’s Parks, Experiences and Consumer Products division. The unit was Disney’s fastest growing profit segment until park closures caused revenue to crash 10% in the second quarter. Disney estimates it lost $1 billion in operating income from the segment alone.

To offset its losses, Disney has furloughed over 100,000 workers, cut executive pay by up to 30%, and is foregoing its July dividend which in itself could save the company $1.6 billion. Reopening parks could be a much needed shot in the arm.

However, after months of sheltering in place for fear of the coronavirus, the real learning point from Disneyland Shanghai’s re-run will be whether consumers still have an appetite for adventure.

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—WATCH: Fortune’s top 10 , Fortune’s weekly newsletter on what it takes to reboot business in the midst of a pandemic

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