Airbnb said on May 5 that it will be cutting its total workforce by 25 percent, or some 1,900 people. In an announcement sent to employees and released publicly, CEO and co-founder Brian Chesky said that as a result of the COVID-19 pandemic's impact on the travel industry, the accommodation-sharing firm's revenue for 2020 is forecasted to be less than half of what it was in 2019. Airbnb had been making losses for much of 2019 despite revenue topping US$1 billion in the second quarter, and this latest projection suggests that its finances for 2020 will be in extremely bad shape.

According to Chesky, the cuts will be based upon extensive changes to Airbnb's business strategy going forward. He wrote in his announcement: "Our process started with creating a more focused business strategy built on a sustainable cost model. We assessed how each team mapped to our new strategy, and we determined the size and shape of each team going forward. We then did a comprehensive review of every team member and made decisions based on critical skills, and how well those skills matched our future business needs."

The affected employees will receive considerable support:

• Severance: 14 weeks of base pay plus tenure increases based on standard practices where they are located
• Equity: all employees will receive Airbnb shares regardless of how long they have been with the company
• Health insurance costs covered even after they leave: 12 months for employees in the US, and until the end of 2020 for employees in all other countries
• Job search support: the company will pay for four months of career services, and Airbnb's recruiting department will assist the affected employees with placement
• Affected employees will be permitted to keep their company-issued laptops

The company's ability to offer its employees such generous terms may be due in part to its large cash reserves. Airbnb reportedly had over US$2 billion in cash at the end of last year, and raised another US$1 billion in funding earlier this year

In March, Airbnb had announced that its top executives would have their pay slashed by 50 percent, while Chesky and the other co-founders would take no salary for the next six months. Airbnb was originally slated to go public this year, but with the current state of the travel and tourism industry, its IPO seems unlikely to happen for some time.