Avis Budget Group has released preliminary first quarter 2020 financial results, as well as a further business update related to COVID-19.

January and February saw strong revenue growth, up 9%, continuing the momentum from the end of 2019, and suggesting that 2020 was shaping up to potentially be a record year. March results were significantly impacted as shelter in place orders effectively eliminated travel activity globally.

For the Q1 2020, Avis expects to report total revenue of $1.7 to $1.8 billion, a 9% decrease at the midpoint, as rental volume was impacted in the second half of March. The rental group also expects net loss to be between $155 and $165 million.

Rental days were in a range of 34.4 to 34.6 million, revenue per day was in a range of $50 to $51, and per-unit fleet costs were in a range of $250 to $255.

The results are preliminary and final results for the Q1 may change. 

April revenue appears to have stabilized, down approximately 80% from the prior year, the company reported. Avis is planning for similar levels of decline in May, but are also anticipating a recovery in the following months as travel restrictions are eased. Avis' current reservations show improvement in June and sequentially increase over the balance of the summer.

"We believe renting a vehicle will continue to be a safe, clean and attractive alternative when people return to normal way of life," Avis wrote in a press release. "We clean our cars before every rental transaction with disinfectant that is CDC-recommended and EPA certified to be effective against human coronavirus, including novel pathogens such as COVID-19."

Update on Mitigation Plans

In March, Avis committed to over $400 million of annualized cost removal and mitigation. The agency reportes it has exceeded its target on an annualized basis by taking  actions to preserve liquidity, remove costs, and shrink the size of its vehicle fleet.

All non-essential capital and operating expenditures were eliminated. Avis is continuing to negotiate with partners and suppliers for further reductions.

Avis has also reduced or furloughed approximately 70% of its global workforce, or approximately 21,000 employees. Additionally, it has reduced base compensation at the level of vice presidents and above, froze merit increases, eliminated 401k match for highly compensated employees, and canceled all future hiring.

Avis reduced the size of its global fleet beginning in March and continuing in April, and currently estimate that it will end June with over 20% fewer units than the prior year. Vehicle dispositions will occur through both traditional methods and by utilizing its alternative distribution strategy by selling directly to dealers and consumers.

Furthermore, Avis has negotiated a significant number of new vehicle cancellations to improve utilization and shrink the fleet size.

As a result, Avis believes it will achieve an estimated $2 billion in annualized cost removal and mitigation.

Earnings Release Announcement

Avis plans to report final first quarter 2020 results after the market close May 4. It will host a conference call for institutional investors to discuss these results May 5 at 7 a.m. Eastern time.

Investors may access the call at ir.avisbudgetgroup.com, or by dialing (877) 407-2991. Investors are encouraged to dial in approximately 10 minutes prior to the call. A web replay will be available at ir.avisbudgetgroup.com following the call. A telephone replay will be available from 11 a.m. Eastern time on May 5 until 10 p.m. on May 19 at (877) 660-6853 using conference code 13702810.