Avis Budget’s Income Drops on Acquisition Costs, Weak Pricing

Avis Budget Group Inc. reported total revenue in 2011 of $5.9 billion, a 14% increase from 2010. Excluding revenue from Avis Europe, which it bought on Oct. 3, full-year revenue increased 7% driven by a 6% increase in volume, partially offset by a 1% decrease in pricing. 

Reported pretax income of $36 million was impacted by acquisition-related charges, for a net loss for 2011 of $29 million, compared with a net profit of $54 million in 2010.

In the fourth quarter, revenue rose 33% to $1.63 billion, from $1.23 billion in the fourth-quarter of 2010. Excluding revenue from Avis Europe, the company's revenue grew 4% in the fourth quarter. However, the company reported a $170 million net loss in the quarter, compared with a loss of $24 million a year earlier.

In North America, revenue increased 3% primarily due to a 5% increase in volume, partially offset by a 3% year-over-year decline in pricing. Adjusted pre-tax income declined $5 million, primarily related to a $15 million increase in marketing spending, partially offset by a 5% decline in per-unit fleet costs.

For the newly acquired Avis Europe operations, revenue declined 2% in fourth quarter 2011 compared to fourth quarter 2010 due to a 3% decline in rental days, partially offset by a slight increase in pricing.

Though the company generally does not give financial guidance, Avis Budget said it expects its North America fleet costs will increase 15-20% on a per-unit basis in 2012, as residual values have generally stabilized at levels experienced prior to the earthquake in Japan in first quarter 2011.
 
Further, the company expects that no single manufacturer will account for more than approximately 25% of its 2012 global rental car fleet, and that vehicles obtained under manufacturer repurchase programs will continue to represent approximately half of its average North American car rental fleet and approximately 70% of its international car rental fleet.

In its quarterly conference call, the company said it had increased prices in its leisure segment in mid-February and would institute another price increase in early March.

For the full press release, click here.

Comment On This Story

Name:  
Email:  
Comment: (Max. 10000 characters)  
Please leave blank:
* Please note that every comment is moderated.

Newsletter: Sign up to receive latest news, articles, and much more.

Read the latest

Auto Focus Blog: A blog covering fleets, auto rental and the business of cars

Autonomous Vehicles and the Changing Role of the Fleet Manager

With fewer drivers and substantially longer fleet lifecycles, fleet managers will pivot to new job functions.

2017: Fleet Mix Will Be Paramount

Car rental companies are migrating to vehicle segments with better residual values, though not without bumps in the road.

Auto Rental Summit: Five Trend Lines

Taking in the seminars, discussions, and networking at the 2016 Auto Rental Summit, trend lines emerged around shifts in model mix, data protection issues, increasing labor costs, workforce engagement, and new platforms to rent cars.

Job Finder: Access Top Talent. Fill Key Positions.