Uber to cut 3,700 jobs due to coronavirus hit

Uber is to cut 3,700 jobs, roughly 14 per cent of its corporate workforce, blaming the drop in business due to coronavirus.
In a staff memo seen by the Financial Times, chief executive Dara Khosrowshahi warned additional cuts would be announced in due course as the company made “difficult adjustments” to match “the reality of our business”.
“We are looking at many scenarios and at each and every cost, both variable and fixed, across the company,” said Mr Khosrowshahi, who has waived his salary for the remainder of the year. “You can expect we will have a further, final update for you within the next two weeks.”

The ride-sharing company joins a string of major Silicon Valley names making deep cuts. Last week, rival group Lyft said it would cut 17 per cent of its workforce. On Tuesday, home-sharing site Airbnb said it planned to lay off 25 per cent of its staff as it focused on its core home-sharing business.
Uber’s job cuts, which were rumoured last week after the company’s chief technology officer resigned, will at first mostly affect customer support and recruiting teams, the company said in a filing. It added that it expected to incur a $20m cost for severance payments.
The company said it would close about 40 per cent of its 450 “Greenlight Hubs”, facilities where the company’s drivers are given assistance in signing up to the app and other related needs.
It did not provide any additional guidance on the extent to which coronavirus had hit its business, other than to reiterate that rides were down “significantly”. “And with our hiring freeze,” Mr Khosrowshahi said in the memo, “there simply isn’t enough work for recruiters.”
In mid-March, as major cities were entering lockdown, Mr Khosrowshahi told investors and analysts that bookings for cars were down as much as 70 per cent in some early-hit markets such as Seattle. Uber is expected to report its first-quarter earnings after the markets close on Thursday.
Before the pandemic, Uber told investors it expected to record one profitable quarter by the end of this year, before adjusting for interest, taxes, depreciation and amortisation. It has since withdrawn its guidance for the year, but has not yet updated on its profitable quarter target.

Last year, the company removed 800 posts in its marketing, engineering and product teams over the course of two separate redundancy rounds in July and September.
Other recent cost-cutting measures include the shutting of its Uber Eats businesses in seven markets — Czech Republic, Egypt, Honduras, Romania, Saudi Arabia, Uruguay and Ukraine — announced on Monday. As part of the plans, Uber said it would transfer its Eats business in the UAE to its Middle East-focused subsidiary, Careem, where about 30 per cent of jobs will also be cut.

KKR posts $4.2bn net loss as investment portfolio hit

KKR recorded a net loss of $4.2bn in the first quarter as economic fallout from the coronavirus pandemic cut in half its carried interest pot, or share of profits for partners.
Despite the tide of red ink, the buyout firm celebrated an 18 per cent quarterly gain on its $3bn global infrastructure fund, which offloaded its largest investment to Swedish rival EQT weeks before the crisis struck.
The February sale of German broadband provider Deutsche Glasfaser locked in gains on that investment shortly before the global economic shutdown gutted portfolio valuations across the private capital sector.

But the virus wrought destruction elsewhere in KKR’s portfolio, forcing the pioneering buyout firm to write down its private equity portfolio by 12 per cent in the first quarter.
Among KKR’s most significant investments is Envision, a US medical staffing company that has hired restructuring advisers to explore ways to reduce its big debt pile.
“We can’t help but . . . express our gratitude for the sacrifices, efforts and professionalism exhibited by all essential workers, including the many who work for our portfolio companies, standing on the front lines of the Covid-19 pandemic,” said co-chief executives Henry Kravis and George Roberts, in a joint statement.
Coronavirus-related losses have decimated the portfolios of Wall Street’s biggest investment groups, potentially robbing them of performance income and casting uncertainty on the finances of public pension schemes that are among the sector’s biggest investors.
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KKR’s larger rival Blackstone last week reported investment losses of 22 per cent in its private equity business, partly as a consequence of its exposure to energy companies — a sector that KKR has largely shunned.
At Apollo Global Management the damage struck even closer to home, with the group calculating that its partners and employees would have been on the hook to hand back $390m in performance-related pay if its portfolio had been liquidated at the valuations recorded in late March.

KKR calculated it would receive just over $1bn in carried interest from selling all of its assets at March valuations, down from nearly $2bn at the end of last year.
However, much of the firm’s revenue takes the form of stable “management fees”, which are usually calculated as a percentage of the amount that clients have agreed to invest and remain constant even if they suffer losses because of economic headwinds or bad bets.
KKR earned $332m in management fees in the first quarter, up from $292m in the same period last year.

Boris Johnson says lockdown easing due to start on Monday

Boris Johnson said on Wednesday that initial steps to ease the UK’s lockdown are set to be taken on Monday, as the prime minister confirmed he will set out his exit strategy in a televised address at the weekend.
Mr Johnson said he would set out his plan for the “second phase” of the UK’s fight against coronavirus on Sunday, adding the government could “get going” with some measures to ease the lockdown on Monday.
Initial relaxation of the lockdown is expected to be limited, and cover outdoor activity including exercise, with further steps coming later in May, when the government’s plan for a robust regime for testing people suspected of having Covid-19, and tracing of their contacts, is meant to be in place.

Mr Johnson announced the government’s new “ambition” to conduct 200,000 daily tests by the end of May, adding ministers intended to “go higher” once that goal was reached.
In his first prime minister’s questions in the House of Commons with Labour leader Keir Starmer, Mr Johnson said he regretted the spread of the virus in care homes.
Care homes have reported significant numbers of deaths and complained about a lack of testing for residents and staff, as well as inadequate supplies of personal protective equipment for workers.
“There is an epidemic going on in care homes, which is something I bitterly regret, and we have been working very hard for weeks to get it down and a huge amount of effort has been gone into by literally tens of thousands of people to get the right PPE into care homes,” said Mr Johnson.
Sir Keir focused on the government’s handling of the crisis, asking Mr Johnson whether its strategy could be judged a success when the UK death toll based on Department of Health figures had risen to almost 30,000.
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On this data, the UK has become the European country with the most deaths, surpassing Italy. “How on earth did it come to this?” said Sir Keir.

The PM rejected Sir Keir’s comparison of the UK’s death toll to other countries, acknowledging the “appalling statistics” but suggesting “the data isn’t there” to make accurate statements.
Mr Johnson also gave his strongest hint yet that there would be an inquiry to examine the government’s handling of the crisis.
“At every stage . . . we were governed by the overriding principal aims: to save lives and protect the NHS,” he said. “There will be a time to look at what decisions we took and whether we could have taken different decisions.”

Brussels and Britain clash over climate conditions in trade deal

The UK is resisting EU moves to incorporate guarantees on respecting international climate change commitments in a future trade deal, adding to mounting disagreements on both sides over how to forge their post-Brexit relationship.
EU officials said that the most recent negotiating round with the UK had revealed a clear rift over co-operation in the fight against climate change.
The split is emblematic of broader difficulties both sides have identified after two rounds of future relationship talks, with negotiators at odds on the conditions that should be attached to a far-reaching trade deal.

While the EU wants to nail down guarantees about shared green ambitions, Britain argues that it should not have to make such legal commitments in exchange for preferential access to the European market. 
The officials said that, during last month’s negotiations, a particular point of disagreement arose over how to weave the international climate deal struck in Paris in 2016 into the future-relationship talks.The EU wants to identify the emissions-reduction pact as an “essential element” in a future EU-UK trade deal, a status normally reserved for core principles such as respect for human rights and the rule of law. The move would create a legal justification for the EU to suspend preferential trading arrangements if Britain walks away from its Paris obligations.
“The commission had already foreseen to include the Paris agreement upfront as an essential element,” said one EU official. “This means de facto that both the EU and the UK commit to respect the Paris agreement, and in case one does not, the other party can take measures. For now, the UK does not seem to want this.”

The agreements we reach . . . should reaffirm both parties’ commitments to the Paris agreement and recognise both sides’ right to decide their own regulation to meet our respective climate goals

Britain has made clear that it rejects the EU’s vision of an overarching future-relationship agreement covering everything from trade to foreign affairs, with a single system for settling disputes. It has argued that any trade deal must respect the UK’s regulatory independence, and said that it will not sign up to conditions that go beyond those in the EU’s existing trade pacts with other countries.A UK government spokesperson said that Britain was “absolutely committed to tackling climate change”, adding that the country would use its presidency of the next UN climate change conference to drive forward implementation of the Paris accord.
Last June the UK adopted a net zero carbon emission target for 2050, making it the first major economy to pledge to cut emissions to close to zero.But the spokesperson confirmed Britain’s opposition to embedding legally-binding pledges into any deal with the EU. 

“The agreements we reach with the EU should reaffirm both parties’ commitments to the Paris agreement and recognise both sides’ right to decide their own regulation to meet our respective climate goals,” the spokesperson said. “This does not require an additional binding international legal commitment.”The EU argues that the volume of trade flows with Britain, coupled with the extensive market access that a tariff-free trade deal would provide, require guarantees to make sure that the bloc’s businesses are not placed at a disadvantage. 
In addition to linking the Paris climate deal to market access, the EU is also seeking a regulatory “level playing field” covering labour market rights, competition policy, state aid and environmental law. 
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The third round of future-relationship negotiations will take place next week. Both Michel Barnier, the EU’s chief negotiator, and David Frost, his UK counterpart, have stressed the need to make progress ahead of an EU-UK summit in June
The talks come at a time when Brussels is under intense public pressure to show that the bloc’s trade policy and its green agenda are not at odds.
The European Commission said in December that the Paris climate deal should from now on be included in the “essential elements” clauses of any trade agreements that the EU negotiates with other countries around the world. Such clauses set out fundamental principles shared by the partner countries, including respect for democracy and human rights.
France and the Netherlands also called for the step in a joint paper this week. 
Brussels officials complain that the future climate co-operation foreseen by Britain is in general less developed than the partnership envisaged by the EU with the UK instead focused on a narrower set of issues. These include how to remain linked to the EU’s emissions trading system, which establishes a price for carbon emissions for polluting industries. 
“It limits its timid ambition to energy only, whereas climate change requires a comprehensive approach,” complained one EU official. 
The UK government spokesperson said that the country’s national legislation “will continue to set our direction as a global climate leader as we work towards net zero emissions”.