McLaren announced Tuesday plans to cut 1,200 jobs, or roughly 25 percent of its staff, as part of a restructuring that will affect all of the company's divisions.

The company blamed the Covid-19 coronavirus pandemic and the resulting loss of revenue from canceled Formula One races and suspended manufacturing and retail operations for the majority of the cuts. The McLaren Applied technology arm has also seen reduced demand, the company said.

McLaren said some of the cuts were also due to a planned budget cap due to be introduced in F1 next year. The cap is currently $175 million, but organizers are discussing reducing it to $145M, with further cuts to be made in subsequent years.

“It is a course of action we have worked hard to avoid, having already undertaken dramatic cost-saving measures across all areas of the business,” said Paul Walsh, executive chairman of McLaren. “But we now have no other choice but to reduce the size of the workforce.”

McLaren MCL 2020 Formula One race car

McLaren MCL 2020 Formula One race car

Operations at McLaren have been on hold since March 24 due to the coronavirus, though lockdowns are slowly starting to be lightened.

The company, which is majority owned by the Bahrain government, had requested an emergency loan of 150 million British pounds (approximately $185 million) from the British government but was knocked back, Sky News reported in May. It also looked at raising funds by offering its headquarters and some of its classic race cars as collateral. This was after shareholders made an equity injection of 300 million British pounds in March.

McLaren's road car division was already experiencing slowing sales prior to the coronavirus. Its 2019 deliveries came in at 4,765 vehicles versus the prior year's record tally of 4,863 vehicles.

Now with the coronavirus, Mike Flewitt, CEO of the road car division, said in May that his ambitious Track25 plan, which was launched in 2018 and called for 18 new cars or derivatives to be introduced by 2025, would need to be delayed. He also said McLaren would reduce the number of build slots for the Elva special edition from a planned 399 examples to 249.