Avis Budget Group Inc., the third- largest U.S. rental-car company, rose 34 percent in New York trading after banks renewed the financing commitments it needs to continue to buy vehicles. Avis climbed 19 cents to 75 cents at 4:15 p.m. in New York Stock Exchange composite trading. They have plunged 94 percent this year.
Cash-strapped customers have cut back on travel during the U.S. recession at the same time that automakers raised prices. Hertz Global Holdings Inc., second to Enterprise Rent-A-Car Co. in size among U.S. rental-car companies, may face similar financing problems if the economy doesn’t improve, said Betsy Snyder, a New York-based bond analyst with Standard & Poor’s.
Avis is also seeking to modify the debt and interest ratios associated with a line of credit. The changes should take effect before the end of the year, the Parsippany, N.J.-based company said today in a statement.
In October, Avis extended the maturity date of its main asset-backed facility for 60 days. The car rental company has cut more than 2,200 jobs, frozen management salaries and closed underperforming locations as part of a plan to reduce costs by as much as $200 million annually by the middle of next year.