Amazon layoffs hit drone division

Just as Amazon Prime Air’s drone deliveries began to gain momentum, the service reportedly suffered another significant setback.

A confidential source who claims to be familiar with the matter told CNBC that Amazon’s (NASDAQ: AMZN) drone delivery division has cut a “significant number” of employees as part of the company’s plans to cut a total of 18,000 jobs. said to have lost

The reported job cuts come less than a month after Amazon launched its first commercial drone delivery service in Rockford, 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 two pilot markets.

“We are committed to our delivery operations in Rockford and College Station and will continue to provide our customers with safe and superior drone delivery services at both locations,” said Zamit. “Over time, we will gradually expand deliveries to more customers in these regions.”

Several LinkedIn posts by former Prime Air employees confirm that some form of headcount reduction has taken place. Two former Amazon drone delivery workers at College Station said they were laid off last week. Two others of him (one works in the Seattle area and another of his is based in Boston) have made similar posts.

But the cuts could have been far more widespread. In a now-deleted LinkedIn post, one former employee claimed Amazon’s drone delivery team in Pendleton, Oregon, had been cut in half.

And according to drone delivery news outlet DroneXL, former employees say the company has cut up to 80% of its flight operations workforce. 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 salaries.

The report, which has not been confirmed by Amazon, paints a disturbing picture of the business that former CEO Jeff Bezos has claimed as the future of delivery.

Watch: Drone mailboxes and city-wide drone networks are on the horizon

Bezos first mentioned the program during a TV appearance in 2013, predicting it would take off within five years. But in his decade since, while competitors like Alphabet’s Wing have launched strong commercial services in Europe and Australia, it has instead been undermined by crashes and mass layoffs.

In the US, rival retailer Walmart has made strides with drone delivery partner DroneUp to build a network reaching 4 million customers from 36 purpose-built hubs across seven states.

Neither Wing nor Walmart have created a drone delivery network on the level Bezos envisioned in 2013. However, both companies have been in commercial flight for over a year now, with Prime Air just taking off last month.

Amazon is one of the few companies to receive Part 135 certification from the Federal Aviation Administration. This allows temporary commercial deliveries using approved aircraft designs.

But Amazon, Wing, DroneUp, and all the other major drone delivery companies currently lag behind Mountain View, Calif.-based Matternet when it comes to navigating the US regulatory jungle.

In December, Matternet became the first drone operator to receive FAA manufacturing certification. The approval will allow the company to build aircraft in the United States for which he received FAA type certification within three months.

Amazon isn’t quite there yet. However, the company’s flight plans could change in the future if the cuts to Prime Air’s drone delivery division prove significant.

Click here for more FreightWaves articles by Jack Daleo.

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