WeWork boss tells staff to prepare for lay-offs
WeWork chief executive Sandeep Mathrani told employees on Tuesday that plans for a new round of lay-offs would be finalised by the end of May, as the lossmaking office space provider implements another cost-cutting plan, according to two people who heard his speech.
The next round of employee cuts, first reported by the Financial Times in March, could effect more than 1,000 of WeWork’s roughly 10,000 employees, according to people familiar with its plans. The company has already shed thousands from its payroll as it sought to contain its expenses, including 2,400 people it laid off last year.
Employees internally have asked whether the staff who operate its more than 700 locations — known as community managers — will be included in the cuts.
Mr Mathrani, who joined the company as chief executive in February, did not specify the number of redundancies that were still to come or where they would fall. People involved in the matter said he was likely to do a large round of lay-offs to avoid the pain of several smaller cuts.
“For the sake of clarity, we are looking at every part of the company — the impact will be by region and function and some teams may be more impacted more than others,” Mr Mathrani said on Tuesday. “In order to make the business succeed, the restructuring is inevitable.”
The property group has been hard hit by the coronavirus pandemic. Some tenants have refused to pay rent or requested the termination of their month-to-month lease agreements. Mr Mathrani told staff that he nonetheless expected WeWork to hit some of its projections next year, including for adjusted earnings before interest, taxes, depreciation and amortisation to turn positive in 2021.
The group, which is backed by Japanese telecoms and technology group SoftBank, is retooling floor plans to follow social distancing guidelines that world health agencies have advised will help curtail the spread of Covid-19. It is also attempting to renegotiate the hundreds of leases it has with property owners to reduce costs.
Bond investors nonetheless remain sceptical of its ability to weather the downturn and WeWork debt was trading deep in distress territory this week at 43 cents on the dollar. The group ended 2019 with $4.4bn of cash and commitments, having burnt through $1.4bn in the quarter.
Marcelo Claure, WeWork’s executive chairman, who is also the chief operating officer of SoftBank, joined Mr Mathrani on Tuesday’s call with employees.
SoftBank was “totally determined to make sure that WeWork will emerge and succeed”, Mr Claure told them. “However, make no mistake that this will require us to make big sacrifices. I want to be clear, we plan to accelerate our cost reduction programmes and be a much more nimble organisation.”