Hertz Global Holdings Inc. provided a business update on the adverse impact on travel demand from the coronavirus (COVID-19).
"Like the rest of the global travel sector, COVID-19's impact on Hertz arrived swiftly, and the reversal in customer demand has been significant," said CEO Kathryn V. Marinello in a statement. "We are aggressively taking actions to sustain operations and preserve liquidity, while confronting the issues raised by some of the most difficult economic conditions we have experienced."
In March, cities around the world rapidly began shutting down and airline travel decreased dramatically, causing increased rental cancellations and declining forward bookings, the statement reads. Hertz immediately began adjusting fleet levels in response to the reduced travel demand. The company has been leveraging its multiple used-car channels and negotiating with suppliers to defer new fleet deliveries or modify previously placed orders.
The company also has been consolidating local rental locations in the U.S. and Europe, offering customers nearby alternative pick up points, as necessary.
Hertz recently implemented employee furlough programs across its North American field operations and U.S. corporate locations to align staffing levels with the slowdown in demand. Senior leaders at Hertz are taking a significant reduction in pay and CEO Marinello is relinquishing 100% of her base salary. Marinello made $1.45 million in base salary in 2019, according to public records.
In addition to reductions in operating and overhead expenses, and deferral of capital expenditures, Hertz is taking actions to access surplus equity in its car-rental fleet facilities to provide incremental liquidity. Ultimately, however, available liquidity will depend on the duration and magnitude of the travel slowdown as well as other factors, including trends in used-car values.
In the statement, Hertz said it is actively engaging with U.S. and European governments along with car rental peers to seek financial support to help the industry through this period.
In a separate letter sent to customers and suppliers, Hertz announced the temporary closures of close to 600 locations, mostly in Europe and some in the Middle East.