Avis Budget Group, Inc. announced today that it will restructure the management and operations of its Budget Truck Rental subsidiary to realign the business for greater operational efficiency.
The restructuring of Budget Truck and the closing of certain contact center facilities are expected to generate annualized savings of $5 million beginning in 2008. The Company will record a one-time pretax charge of approximately $10-12 million related to these actions in its fourth quarter results.
The restructuring plan calls for the closing of Budget Truck Rental's headquarters in Denver, Colo. in early 2007. Budget Truck Rental's senior management and certain back-office functions including accounting, finance, marketing, fleet management and sales will be consolidated within Avis Budget Group facilities in Parsippany, N.J., Virginia Beach, Va., and Tulsa, Okla.
Out of approximately 290 total positions related to Budget's Denver truck rental operations, approximately 50 are being eliminated, and approximately 90 employees have been offered relocation. Employees whose positions are eliminated or are being displaced will receive severance payments and outplacement assistance.
As part of the restructuring, the position of president of Budget Truck Rental will be eliminated. As a result, Gerald Riordan, who has served in this role since March 2003, will leave the Company in early 2007. In the interim, Mr. Riordan will remain with the Company to assist in the restructuring.
Joseph Ferraro, formerly regional manager of Avis Budget Group's New York / Washington car rental operations, has been named vice president, operations, for Budget Truck Rental, overseeing the daily management of Budget's network of more than 2,800 truck rental locations throughout the continental United States, and a fleet of more than 30,000 trucks serving both the consumer and light-duty commercial sectors.
"After a comprehensive evaluation of the rental truck industry and Budget Truck Rental operations, we have renewed our commitment to this business and have concluded that we can drive cost savings by more closely aligning our truck and car rental management and operations," said Ronald L. Nelson, chairman and chief executive officer, Avis Budget Group, Inc. "We are very grateful to Gerald Riordan for the outstanding job that he has done in guiding and strengthening the Budget Truck business over the past three years, and we wish him well in his future endeavors."