Amazon Layoffs Hit Drone Division

People familiar with matter say Prime Air drone unit is experiencing 'significant' layoffs.

Editor’s Note: This article originally appeared on FreightWaves.com.

Just as Amazon Prime Air drone delivery was beginning to gather momentum, the service reportedly was hit with another key setback.

Confidential sources claiming to be familiar with the matter told CNBC that Amazon’s (NASDAQ: AMZN) drone delivery unit lost a “significant number” of employees as part of the company’s plans to cut a total of 18,000 jobs

The reported layoffs come less than one month after Amazon launched its first commercial drone delivery service in Lockeford, California, and College Station, Texas.

When asked for further confirmation and details about the layoffs, Amazon spokesperson Av Zammit instead reaffirmed the e-commerce giant’s commitment to its two pilot markets.

“We are committed to our delivery operations in Lockeford and College Station and will continue to offer a safe and exceptional drone delivery service to our customers in both locations,” Zammit said. “We will gradually expand deliveries to more customers in those areas over time.”

Several LinkedIn posts from former Prime Air employees confirm that a reduction in head count took place in some form. Last week, two former employees working on Amazon’s drone delivery operations in College Station said they were let go. Two others, one working in the Seattle area and another based in Boston, made similar posts.

But it’s possible the job cuts were much more widespread. In a now-deleted LinkedIn post, one former employee claimed Amazon’s drone delivery team in Pendleton, Oregon — where the company houses one of its many testing sites — was slashed in half.

And according to drone delivery news outlet DroneXL, former employees said the firm cut up to 80 percent of its flight operations personnel. The employees, who shared the information on condition of anonymity, cited cost cutting as the reason for the layoffs, claiming the company decided which employees to keep based on salary.

The reports, while unconfirmed by Amazon, paint a worrying picture of a business that former CEO Jeff Bezos had billed as the future of delivery.

Bezos first made mention of the program during a TV appearance in 2013, predicting that it would get off the ground within five years. But in the decade since, it has instead been marred by crashes and mass layoffs while competitors like Alphabet’s Wing set up robust commercial services in Europe and Australia.

In the U.S., rival retailer Walmart has made strides with drone delivery partner DroneUp, building a network that now reaches 4 million customers from 36 dedicated hubs spanning seven states, including a service in Utah that just launched last month.

Neither Wing nor Walmart has created a drone delivery network on the level of what Bezos envisioned in 2013. But both firms have been flying commercially for well over a year, while Prime Air just got off the ground last month.

Amazon, for its part, is one of a handful of firms that have obtained a Part 135 Certification from the Federal Aviation Administration, which allows it to temporarily conduct commercial deliveries using an approved aircraft design.

But Amazon, Wing, DroneUp and every other large drone delivery company currently lag behind Mountain View, California-based Matternet when it comes to navigating the U.S. regulatory jungle.

In December, Matternet became the first drone operator to receive an FAA Production Certification. The approval will allow the firm to manufacture its aircraft — which received an FAA Type Certification less than three months prior — in the U.S.

Amazon isn’t quite there yet. But if the cuts to Prime Air’s drone delivery division prove significant, the business’ flight plan may be modified moving forward.

For more coverage on drone delivery, go to FreightWaves.com.


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