Airbnb Inc. said today it’s laying off about 1,900 staff members, some 25% of its workforce, as the accommodation booking provider struggles to deal with a huge loss of business from the COVID-19 pandemic.

The job cuts were announced in a letter to employees written by co-founder and Chief Executive Officer Brian Chesky, who explained that the actions were necessary because Airbnb’s revenue this year is forecast to be less than half of what the company earned in 2019.

Exactly what that figure is remains unknown, since Airbnb is privately owned. But it was reported in February that the company was bleeding money, having lost $322 million in the first three quarters of 2019.

Airbnb has taken steps to attempt to weather the coronavirus storm, raising $2 billion in funding. That was from $1 billion in a combination of debt and equity April 6, followed by an additional $1 billion via a line of credit April 15. But that funding is seemingly not enough given difficult  conditions.

Noting that global travel has come to a standstill, Chesky said that there two hard truths: that when travel will return is unknown and that when it does, it will look different.

“While we know Airbnb’s business will fully recover, the changes it will undergo are not temporary or short-lived,” Chesky said. “Because of this, we need to make more fundamental changes to Airbnb by reducing the size of our workforce around a more focused business strategy.”

The layoffs will take place across Airbnb, with reductions to be based on the company’s future business strategy and the capabilities required to facilitate that. The one exception to that, Chesky said, is that Airbnb will be “unwavering” in its commitment to diversity.

Employees in the U.S. losing their jobs will receive 14 weeks of base pay plus one additional week for every year worked at Airbnb, and they will also receive 12 months of health insurance. Outside the U.S., employees will also receive 14 weeks of pay with tenure increases subject to local laws and practices and healthcare provided to the end of 2020. In addition, the one-year cliff on equity has been dropped, with everyone leaving becoming a shareholder.

Job cuts amid a rapid loss of business make sense for Airbnb, but whether they’re all related to COVID-19 is another question. Given that the company was known to be burning money precoronavirus, the job cuts may have been necessary anyway for Airbnb as it aims for profitability ahead of an initial public offering, now likely delayed until 2021 or 2022.

Photo: Pixabay