Hertz Global Holdings, Inc. provided the following business update related to the significant, adverse impact on travel demand from the coronavirus (COVID-19).
"Like the rest of the global travel sector, COVID-19's impact on Hertz arrived swiftly, and the reversal in customer demand has been significant," said Kathryn V. Marinello. "We are aggressively taking actions to sustain operations and preserve liquidity, while confronting the issues raised by some of the most difficult economic conditions we have experienced."
Hertz experienced strong revenue and productivity in January and February, which followed 10 consecutive quarters of year-over-year revenue growth and nine quarters of year-over-year Adjusted Corporate EBITDA improvement. For the first two months of 2020, global revenue increased 6% on 8% higher U.S. car rental revenue. In March, cities around the world rapidly began shutting down and airline travel decreased dramatically, causing increased rental cancellations and declining forward bookings. Hertz immediately began adjusting fleet levels in response to the reduced travel demand. The Company has been leveraging its multiple used-car channels and negotiating with suppliers to defer new fleet deliveries or modify previously placed orders.
In addition, Hertz is aggressively managing costs and substantially reducing capital expenditures. It is prioritizing sales and marketing strategies to be more in line with the current economic environment, while providing flexibility to support its customers. The Company also has been consolidating local rental locations in the U.S. and Europe, offering customers nearby alternative pick up points, as necessary.
Hertz recently implemented employee furlough programs across its North American field operations and U.S. corporate locations to align staffing levels with the slowdown in demand. This was a very difficult decision and was not easily made, knowing that many good people would be affected. The Company hopes to bring back as many team members as possible once global travel rebounds.
In order to support the organization, while working to effectively manage the dynamic environment and protect the future of the business, senior leaders at Hertz are taking a significant reduction in pay and CEO Marinello is relinquishing 100 percent of her base salary.
In terms of financial flexibility, the Company has access to approximately $1.0 billion in liquidity with no significant corporate debt maturities due until June 2021. In February, Hertz increased its U.S. vehicle debt capacity by $750 million and does not anticipate any vehicle debt financing requirements for its global car rental business for the remainder of the year.
In addition to reductions in operating and overhead expenses, and deferral of capital expenditures, the Company is taking actions to access surplus equity in its car-rental fleet facilities to provide incremental liquidity. Ultimately, however, available liquidity will depend on the duration and magnitude of the travel slowdown as well as other factors, including trends in used-car values.
Hertz, together with its car rental peers, is actively engaging with U.S. and European governments, seeking financial support to help the industry through this period.
"This situation is unprecedented. Events are unfolding rapidly and the picture changes daily. But Hertz is a resilient company, with resilient brands and resilient people," said Marinello. "The actions we are taking should position us to navigate the current environment and emerge an even stronger business as world travel recovers. Our proactive position ensures we are here to support our customers now – providing critical transportation needs for government, healthcare, delivery and frontline relief workers -- and over the long term."
