Avis Budget Group Inc posted lower-than-expected third-quarter profit, hit by the slowing economy as customers cut their discretionary spending on travel, translating into lower rentals. For the third quarter, revenue was $1.7 billion, virtually the same as in third quarter 2007.
Avis also said it expects 2008 revenue to be significantly lower than its prior view due to a fall in vehicle rental revenue. The company said its domestic time and mileage revenue per rental day will be down 1 percent to 2 percent but sees domestic rental day volume to be unchanged in 2008.
The company is looking to cut costs and better manage its car fleets, operate more fuel-efficient vehicles, tie up with airlines and hotels, and improve its services and offerings in a slowing U.S. economy.
Avis had cut about 700 jobs in the third quarter, while Hertz had begun programs to reduce headcount by about 1,400 and close about 80 locations, in an attempt to ease costs.
In a statement, Avis said it also plans to raise prices and consolidate some of its operations to counter the challenging environment.
The weak macroeconomic environment and cuts in airline capacity would result in lower on-airport rental volumes, it said.