Car rental firm Hertz has filed for Chapter 11 bankruptcy protection in the US, following “an abrupt decline in the Company’s revenue and future bookings” as a result of the coronavirus crisis.
Global travel restrictions, and lockdowns in many cities and countries worldwide have decimated the car rental market in recent months, and Hertz said that “uncertainty remains as to when revenue will return and when the used-car market will fully re-open for sales”.
The company stressed that “All reservations, promotional offers, vouchers, and customer and loyalty programmes, including rewards points, are expected to continue as usual”, adding that it had $1 billion in cash on hand to support continuing operations.
Hertz also said that it intends to continue to provide “the same vehicle quality and selection”.
The move affects US-based Hertz Global Holdings, and certain US and Canadian subsidiaries, but the group’s international operating regions including Europe, Australia and New Zealand are not included in the proceedings, and nor are its franchised locations.
The company said that its businesses including Hertz, Dollar, Thrifty, Firefly, Hertz Car Sales, and Donlen subsidiaries “are open and serving customers”, adding that “Customers can count on the same high level of service and reliability, including new initiatives such as ‘Hertz Gold Standard Clean’ sanitization protocols to provide additional safety in response to the COVID-19 pandemic”.
Prior to filing for bankruptcy protection, the group had taken several measures to “align expenses with significantly lower demand levels”, including reducing planned fleet levels through vehicle sales and by cancelling fleet orders, consolidating off-airport rental locations, and implementing furloughs and layoffs of around 50 per cent of its global workforce.
Hertz had also sought assistance from the US government, but said that “access to funding for the rental car industry did not become available”.
Commenting on the news on Friday, Hertz President and CEO Paul Stone, said:
“Hertz has over a century of industry leadership and we entered 2020 with strong revenue and earnings momentum. With the severity of the COVID-19 impact on our business, and the uncertainty of when travel and the economy will rebound, we need to take further steps to weather a potentially prolonged recovery.
“Today’s action will protect the value of our business, allow us to continue our operations and serve our customers, and provide the time to put in place a new, stronger financial foundation to move successfully through this pandemic and to better position us for the future.
“Our loyal customers have made us one of the world’s most iconic brands, and we look forward to serving them now and on their future journeys.”