Avis Shares Surge on Earnings Beat and Signs of Travel Recovery
(Bloomberg) -- Avis Budget Group Inc. shares soared as much as 14.1% in postmarket trading after the company said it was able to offset lower demand for rental cars with cost cuts -- and signaled a rebound in travel may be underway.
Avis said Tuesday it lost $5.60 a share in the second quarter, beating a consensus estimate for a $6.05 per share loss. That sent its stock rising as high as $31.48 in late trading, up from its closing price Tuesday of $27.60.
While under pressure from the coronavirus pandemic, streamlining efforts have allowed Avis to avoid the fate of rival Hertz Global Holdings Inc., which filed for bankruptcy in May.
“We accomplished this by quickly identifying the impact that Covid-19 would have on our business, taking immediate actions to shrink our fleet to match demand, executing a debt financing transaction to build additional liquidity, cutting over $1 billion in expenses across our business,” Joe Ferraro, the company’s chief executive officer, said in a statement.
The rental company burned through $580 million in cash during the latest quarter but expects to be cash-flow positive for the rest of the year. It said volume has grown every week since early April and last week saw the strongest recovery in volume so far.
Avis cut expenses in part by reducing the size of its fleet by 26% -- or 100,000 vehicles -- and canceling orders for another 185,000 cars and trucks. Even so, it is using just half of its remaining fleet capacity, down from at least 80% before the Covid-19 crisis.
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