Avis Budget Group Inc. posted a better-than-expected second-quarter profit, but also announced job cuts and fleet size reductions, reducing its fleet size to tackle the challenging travel environment.

Net income for the quarter was $15 million, or 15 cents a share, compared with $24 million, or 22 cents a share, a year-ago. The net income was higher than analysts’ expectations of 6 cents a share, before special items, according to Reuters Estimates.

Revenue rose 4 percent to $1.58 billion, beating analysts' average expectation of $1.50 billion. Car rental revenue increased 5 percent year-over-year, but car fleet costs also rose 11 percent.

Avis Budget Group Chief Executive Officer Ronald Nelson said the impact of rising fuel costs and a weak economy began to affect commercial travel volumes in the second quarter. He said leisure traffic was less affected, as softer transaction volume was more than offset by longer length of rental.

For the full year, the company expects revenue to rise above $6 billion it posted in 2007. Domestic fleet costs are expected to rise by about 4 percent to 6 percent per vehicle.