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Uber says rides down by as much as 70% in cities hardest hit by coronavirus, looks at delivering meds

Ingrid Lunden

Uber -- the on-demand transportation and food delivery behemoth -- has been hit hard by the novel coronavirus pandemic. CEO Dara Khosrowshahi said today in a call with investors that ride volume has gone down by as much as 60%-70% in recent days in the hardest-hit cities like Seattle, and that's before you consider the pauses in some of its services, and the dubious distinction of becoming one of the earliest proof-of-concepts of just how spreadable this virus really is.

But Khosrowshahi also told investors in an update that the company believes it is "well-positioned" to ride the troubles out even in the worst-case scenario of rides down by 80% for the year. And even as rides for passengers are down, it is also considering leveraging its network for delivering other things, such as medicine or basic goods.

"We already have contact in the health sector, we've got all of the processes that we need," he said, referring to Uber Health.

He also said that the company had "ample liquidity." The company said it currently has $10 billion of unrestricted cash on hand as of the end of February, with $1.5 billion of that earmarked for M&A through the end of the year (that includes investment in Cornershop and its Careem obligation).

If rides globally declined by as much as 80% (the extreme edge case, which Uber said it doesn't expect to happen) that would still leave $4 billion of unrestricted cash in the bank, he added, plus a $2 billion credit line. In a  scenario where Q2 is the "bottom" with recover in Q3, that scenario shows $6 billion in cash on hand, plus the $2 billion revolving credit.

"The most important thing to know is that we're well positioned to weather this crisis and emerge even stronger," he said on the call. "We have ample liquidity. We have a highly variable cost structure, a global footprint, multiple business lines that give us some diversity and case studies for how quickly our businesses likely to rebound after a shock like this. All of this gives us confidence.... As soon as businesses start moving, Uber will, too."

There was no update on revenue guidance today, but the overall picture painted by the company was a wave of positive news for investors. Uber's shares are up by some 28 percent in trading today.

Some cities, like London, look like they are only starting now to ramp up in the spread of Covid-19 infections, so further lockdowns to restrict movement are likely to come. On the other side, for those that are coming out of the "curve" and bottom out in terms of seeing new cases, business is picking up. For example, in Hong Kong rides were down 45% at the peak but now they are down by 30%.

Eats is shaping up to be one of the more strong performers in the wake of people travelling less, he added.

While the company has put in place a program to support its drivers that might get hit by the virus, it's also been encouraging those that are still there to do more deliveries for the other side of the business, specifically Eats but potentially other items, too.

"It's a real advantage that we have in our business line which is not only are we more useful and therefore our drivers because we can give them alternate uses of work but Eats, our Eats business has an instant inflow of folks who are ready for work," he said. "So, that's really what we're working on, is getting move over to Eats because the Eats business is definitely held up much much better." The company has been waiving delivery fees for independent restaurants in cities where they remain open.

You can hear a playback of the call here.