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Hertz has filed for bankruptcy. Quoting theThe rapid and catastrophic impact of the pandemic on your business, the Giant announced Friday that he had applied for Chapter 11 protection in Delaware. The company, which also operates rental car brands Dollar, Thrifty and Firefly with some 12,400 offices worldwide, will aim to restructure and stay in business. The filing is one of the highest-profile business bankruptcies in the wake of the virus crisis so far.
"The impact of COVID-19 on travel demand was sudden and dramatic, causing an abrupt decline in the company's revenue and future bookings," the company said in a statement. In fact, with shelter requests in place around the world, car rental companies have been hit hard by very low travel bookings, as has the, hotel and industries.
The impact of the pandemic on your business may have been sudden, but Hertz's financial decline has been a constant concern for many years. In 2019, despite reporting a record annual income of $ 9.8 billion, it recorded a loss of $ 58 million, a substantial improvement on the loss of $ 225 million that the company reported in 2018.
As part of its bankruptcy filing announcement, the company confirmed that it has more than $ 1 billion in cash available to support continued operations, but according to CNN, the company is struggling against $ 18.8 billion in debt as of December 31. March, an increase of $ 1.7 billion from the end of 2019.
Hertz has been telegraphing his financial distress for some time. In late April, the company was reported to have lost a lease payment and athat Hertz was "… reducing expenses, deferring capital expenditures, and adjusting fleet levels and staffing," and further noted that the company was having ongoing conversations with lenders and the United States Treasury.
Hertz chief executive officer Kathryn Marinello left the company on May 16, and the board appointed his replacement, Paul Stone, formerly executive vice president and director of retail operations for the company, on May 18.
In his statement, Hertz revealed that so far "he has implemented layoffs and layoffs of 20,000 employees," representing approximately half of his global workforce. Of that total, it is estimated that in North America, the company has already laid off 12,000 employees this year and placed another 4,000 workers on leave.
Hertz has almost stopped ordering new cars from automakers, and it wassome of their liveries especially and high-performance rentals, models among the crown jewels of your fleet.
In recent years, along with taxi companies and the rest of the traditional car rental industry, Hertz had been hit by the boom incompanies like Uber and Lyft, along with startups like . The company has attempted to venture into these emerging businesses, launching initiatives such as its 24/7 car-sharing service, as well as to combat a rise in the automaker . Additionally, annual increases in telecommuting before the pandemic have also slowed business-related travel, long a pillar of rental car reservations.
While not unexpected, Hertz's bankruptcy and increased distress in the rental industry as a whole during the COVID-19 crisis are already affecting the auto industry as a whole. Rental companies are estimated to be responsible for about 10% of auto companies' annual purchases of new vehicles.