Dollar Thrifty Automotive Group, Inc. today announced a reorganization, including the flattening of the management structure, staff reductions, and the assignment of new responsibilities to key executives at its Tulsa-based headquarters, the company reports.
"Vehicle manufacturers have been reducing the number of vehicles sold to the rental car industry and increasing our fleet costs," said Gary L. Paxton, President and Chief Executive Officer. "We are also absorbing higher vehicle financing costs as a result of lower credit ratings in the auto industry. While raising rental rates is the key to offset these vehicle related cost increases, we are also taking steps to further reduce operating costs throughout the organization in an effort to reinforce our objective to be the low cost provider in the rental car industry. The Company's action today is designed to respond to these auto industry changes by reducing operating costs and flattening the organization to make it even more efficient and more capable of a rapid response to the changing environment," said Paxton.
The personnel changes, effective immediately, eliminate approximately 25 percent of management positions at the Company's headquarters in Tulsa, Oklahoma, as well as other support staff. This is in addition to the 10 percent reduction in executive management positions the Company made last year at this time. The financial impact of these actions will be disclosed with the Company's earnings release on August 7, 2007.
During the past year, Dollar Thrifty has implemented many cost savings and efficiency initiatives, including:
-- Outsourcing its IT services to EDS
-- Outsourcing certain call center operations
-- Introducing productivity improvements in all field locations utilizing lean management techniques
The Company completed a significant financing transaction in the second quarter, which provides more flexibility to finance non-program vehicles and vehicles purchased from non-investment grade manufacturers. This included $250 million in corporate debt that was used to pay down asset backed vehicle financing.
"We were aggressive in dealing with the potential credit rating downgrade of our key vehicle supplier as a result of its pending sale, which allowed us to put this financing in place during very favorable market conditions," Paxton said.
"We also have several revenue growth initiatives in the pipeline right now that are quite encouraging, including increasing efforts to target both the domestic corporate segment and international inbound segment and expanding our sales team in the U.S. and around the world," Paxton said. "We're also continuing our aggressive franchise acquisition strategy with the purchase of ten Thrifty franchises and one Dollar franchise already this year."
As part of this reorganization, R. Scott Anderson, Senior Executive Vice President of Global Marketing and Franchise Operations will take over responsibilities for corporate operations, fleet and revenue management. John J. Foley, Senior Executive Vice President of Corporate Operations will take over responsibilities for global marketing and franchise operations. "Having these two key executives switch roles will provide them with broader business experience while bringing a fresh perspective on key areas of our business," Paxton said.
"We expect the organizational changes made today will further improve our focus on the customer while also maintaining a sharp focus on continuous improvement," said Paxton.