Hertz declares bankruptcy, blames COVID-19

Hertz has filed for bankruptcy. Citing the Corona virus The rapid and catastrophic effects of the pandemic on their business Rental car giant Announced Friday that it had applied for Chapter 11 protection in Delaware. The company, which also operates rental car brands such as Dollar, Thrifty and Firefly with around 12,400 branches worldwide, will aim to restructure the business and stay in business. Filing is one of the best known bankruptcies after the virus crisis.

“The impact of COVID-19 on the demand for travel was sudden and dramatic, resulting in a sudden drop in the company’s earnings and future bookings,” the company said. Indeed, car rental companies are heavily affected by greatly reduced travel bookings when ordering accommodation around the globe, much like that airline, Hotel and restaurant Industry sectors.

The impact of the pandemic on their business may have been sudden, but Hertz’s financial decline has been an ongoing problem for many years. Despite record annual sales of $ 9.8 billion, the company reported a loss of $ 58 million in 2019, a significant improvement over the $ 225 million loss that the company reported in 2018.

As part of its bankruptcy filing, the company confirmed that it had $ 1 billion in cash to support its continuing operations according to CNNThe company is battling $ 18.8 billion in debt as of March 31, an increase of $ 1.7 billion since late 2019.

Hertz has been telegraphing its financial plight for some time. In late April, it was reported that the company had missed a lease payment, and a Company spokesman said Roadshow that Hertz “… cut spending, postponed investments, and adjusted fleet and staff levels,” and noted that the company was in ongoing discussions with lenders and the US Treasury Department.

Hertz’s CEO, Kathryn Marinello, left the company on May 16 Board named their replacement, Paul Stone, Previously, he was the company’s Executive Vice President and Chief Retail Operations Officer on May 18.

In its statement, Hertz announced that it has “vacationed and laid off 20,000 employees,” which is about half of its global workforce. The company has laid off an estimated 12,000 employees in North America this year and put another 4,000 on vacation.

Hertz has virtually stopped ordering new cars from car manufacturers, and that’s about it It was recently announced that the company had started selling out Some of them are specially painted Chevrolet Corvette Z06 and Camaro High-performance rents, models among the crown jewels in its fleet.

In recent years, Hertz, along with taxi companies and the rest of the traditional car rental industry, has been on the rise of Carpool Companies like Uber and Lyft together with Carpool Startups like Turo. The company itself has tried to penetrate these emerging companies and has launched initiatives like his 24/7 car sharing service as well as Monthly subscription service launched in June to fight a rise of the automaker monthly subscription pilot programs. In addition, the annual increase in teleworking prior to the pandemic has also slowed business travel, which has long been a pillar of car rental bookings.

Although this is not unexpected, Hertz’s bankruptcy and the increasing hardship of the entire rental industry during the COVID 19 crisis are already weighing on the entire auto industry. It is estimated that the lessors are responsible for around 10% of the annual new car purchases by automobile companies.