Avis Budget Group provided details Dec. 4 of the progress the company has achieved to date from the cost reduction initiatives announced on Nov. 6.
Actions taken over the past weeks against the five-point plan include:
- Cost reductions: The company has frozen management salaries, adjusted the size and composition of its planned fleet and eliminated more than 2,200 positions across all areas of its business.
- Station, segment and customer profitability: The company has taken steps to revise or terminate certain unprofitable customer relationships, and to close underperforming off-airport locations.
- Price increase: The company recently announced an increase in retail car rental rates of $3 per day and $20 per week, effective Dec. 1, 2008, applicable to all airport and selected off-airport rentals in the U.S. other than those covered by corporate account agreements or other special arrangements.
- Purchasing: The company has begun the process of consolidating procurement by appointing a corporate head of purchasing and has identified most of the addressable spend which it will focus on in 2009.
- Back-office consolidation: The company will close its claims processing facility in Orlando, Fla., with claims processing to be consolidated within other company offices or outsourced. In addition, the company's Wichita Falls, Texas, contact center will be closed, with customer calls to be handled by third-party service providers or by the company's Tulsa, Okla. and Fredericton, New Brunswick contact centers.
The company also noted that, along with other vehicle rental industry competitors, it is encouraging the federal government to take steps to bolster liquidity in those financing markets that support the purchase of vehicles, both by the rental industry and other fleet purchasers as well as by dealers.