Airbnb’s big layoff that took effect this week isn’t going to save the company. And, at least this year, it’s unlikely to do much to slow the company’s cash burn.
The San Francisco based corporation announced last week it was going to cut up to 1,900 jobs, or about 25% of its workforce. Those cuts took effect Monday for affected workers in the US and Canada. While the number of jobs is significant and the hardships faced by those workers — laid off in the middle of both a pandemic and an economic downturn — could be as well, the savings to Airbnb from the cuts aren’t likely to amount to a whole lot, relatively speaking.
At best, the company could save around $254 million from the layoffs this year, Business Insider estimates. To put that number in context, Airbnb is facing more than $2.4 billion revenue shortfall in 2020, , company CEO Brian Chesky said in the layoff announcement last week.
The company has not said how much it expects to save as a result of the layoffs, and an Airbnb representative declined to comment.
The amount of the cost savings is important because Airbnb was already losing money before the Covid-19 crisis and is almost certainly will lose much more after this. Although the company shored up its cash stash last month with $2 billion in debt financing, that entire amount and more would be consumed by its revenue shortfall if it didn’t cut costs to match.
Although these job cuts will help close the gap, Airbnb will likely have to find other sources of savings, particularly if the economic downturn and the near-freeze on travel persists longer than expected.
A Highlight Hollywood editor is engaged to be married to one of the S.F. company’s executives.
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Written By: Amy Feinstein, Sr. Writer, Entertainment Editor
Photographs are Courtesy: AP; Reuters
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