Hertz, Avis Begin Layoffs Amid Push for U.S. Rental-Car Rescue
Avis Slashes Costs, Braces for 60%-or-Worse Drop in Reservations
(Bloomberg) -- Hertz Global Holdings Inc. and Avis Budget Group Inc. are beginning to lay off workers to cut costs while pressing the federal government to consider including their sector in any federal assistance provided to travel-related companies.
Hertz started furloughs at midnight on March 21, Paul Stone, chief operations officer for the company’s North American operations, wrote in an internal memo. Avis is shedding staff as part of more than $400 million in annualized cost reductions announced in a statement Monday.
A Hertz spokeswoman confirmed the authenticity of Stone’s memo. Neither company released details on how many employees they’re laying off.
The job cuts come days after Hertz Chief Executive Officer Kathryn Marinello and her peers at Avis and Enterprise Holdings Inc. asked the U.S. Treasury Department to include their companies in an aid package for airlines and other businesses whose operations have been decimated by travel curbs that span the globe. They’re seeking grants to help address liquidity issues and for support from the Federal Reserve, among other measures.
Dramatic Drop
“We haven’t experienced anything of this magnitude before, with such profound impact on our business,” Stone said in his letter to Hertz’s North American employees. “You are seeing firsthand as travel demand has dropped off dramatically.”
Hertz shares rose as much as 33% and Avis gained as much as 27%, paring steep declines for the year.
Hertz is laying workers off without pay, though they will keep their medical benefits, Stone said. The company also is cutting discretionary spending and getting rid of some cars in its fleet, he wrote, because rental volumes have plummeted.
Avis’s Cuts
Avis also is paring back compensation for executives and senior employees, pausing capital spending and shrinking its vehicle fleet. Travel restrictions have contributed to reservations plunging about 60% for April, and there’s potential for further decline, the company said in its statement.
“We are committed to taking the necessary steps to protect the health and safety of our customers, our employees, and to navigate through this disruptive global event,” Joe Ferraro, Avis’s interim chief executive officer, said in the statement.
The company says it expects to have enough liquidity to operate through the end of 2020 and beyond.
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