Avis Budget Group Sheds 70% of Workforce

Avis Budget Group reported revenue of $1.75 billion in the first quarter of 2020, the company released in an investor presentation on Sunday.

This was $179 million lower than the first quarter of 2019, driven by 75 fewer rental days and 1% lower revenue per day. Americas revenue decreased 5%. International revenue declined 16% due to the impact of lower rental days.

Adjusted EBITDA loss was $90 million, $89 million lower than the first quarter of 2019.

April revenue is trending down 80% from the prior year, the company reported. Similar trends are expected in May, but the company “expects a gradual recovery thereafter.”

Avis estimates June month end fleet size will be more than 20% lower than prior year.

“The pandemic has severely impacted air travel and airport demand,” said Avis in the quarterly investor’s presentation. “This is anticipated to continue into May and will begin to recover in June and improve into the balance of the year.”

“Expansion into the off-airport market has tempered the revenue declines,” Avis said. “As shelter-in-place restrictions are lifted, we believe leisure travel demand may prefer private transportation to mass transit.”

The company laid off or furloughed approximately 70% of its workforce, or 21,000 employees.

Despite February year to date revenue increasing 9%, beginning in March, Avis said it aggressively disposed of vehicles through traditional channels and direct sales to both dealers and consumers. Avis estimates June month end fleet size will be more than 20% lower than prior year.

The company projects an operational cash burn for the months of April, May, and June to be $400 million, $250 million, and $150 million, respectively, with sequentially improvement due to aggressive fleet reduction actions.

The company says its operational forecast is cash flow positive in July and beyond.

The sooner we match fleet size to demand, the faster we turn cash flow positive.

The company remains “hopeful for the return of US-based Cash-for-Clunkers or similar international programs.”

As shelter in place restrictions are lifted, Avis believes leisure travel demand “may prefer private transportation to mass transit” and the company has a “unique opportunity to provide a potentially safer alternative to traditional modes of transportation and ride hail.

Related: Hertz, Avis Furlough Workers, Cut Pay