WeWork is on track to turn a profit by 2021 — a whole year ahead of schedule, aided by the COVID-19 outbreak, according to an interview with its chairman.
The Financial Times reported that as a result of “cost-cutting” measures and high demand for flexible office spaces due to social distancing needs, the office-sharing company is set to become profitable a year earlier than predicted.
In February, executive chairman Marcelo Claure set a target of becoming profitable by the end of 2021.
However, in an effort to minimise costs due to the coronavirus crisis, the New York-based company cut its work force by more than 8,000 people — from 14,000 last year to just 5,600 in 2020, Claure told the Financial Times.
In addition, it renegotiated leases and sold off assets.
Meanwhile, The Financial Times reported, WeWork has seen a “strong demand” for flexible office spaces since the start of the COVID-19 crisis.
With many Brits now working from home, there has been a significant reduction in demand office space across the UK. However, some firms have turned to WeWork to set up “satellite offices” closer to where their employees live, helping them to spread out staff more easily to maintain social distancing, Claure explained.
“Everybody thought WeWork was mission impossible. [That we had] zero chance. And now, a year from now, you are going to see WeWork to basically be a profitable venture with an incredible diversity of assets,” Claure told the Financial Times.
He added: “We have companies like Facebook, Google and Amazon who have told their employees that they can work from wherever they are. We have a lot of those employees who basically now come to a WeWork facility to use it one day, a week, two days a week, three days a week.”
Despite the office space boon, some tenants couldn’t afford to pay rent or have asked to terminate their leases, causing WeWork to lose $482m (£381.9m) in the first three months of the year, cutting accessible cash to under £3.2bn, according to the Financial Times.
***CORRECTION: This story previously citing accessible cash to £3.2m. It should have said £3.2bn. This has now been corrected.