Hertz Car Rental files for bankruptcy ...now I don't know about you guys but almost every time I flew I was renting a car at the other end (when in the US almost certainly).
Interesting filing ... Hertz Global Holdings, Inc. ("Hertz") announced it and certain of its U.S. and Canadian subsidiaries have filed voluntary petitions for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware. The impact of COVID-19 on travel demand was sudden and dramatic, causing an abrupt decline in the Company's revenue and future bookings. Hertz took immediate actions to prioritize the health and safety of employees and customers, eliminate all non-essential spending and preserve liquidity. However, uncertainty remains as to when revenue will return and when the used-car market will fully re-open for sales, which necessitated today's action. The financial reorganization will provide Hertz a path toward a more robust financial structure that best positions the Company for the future as it navigates what could be a prolonged travel and overall global economic recovery.Hertz's principal international operating regions including Europe, Australia and New Zealand are not included in today's U.S. Chapter 11 proceedings. In addition, Hertz's franchised locations, which are not owned by the Company, also are not included in the Chapter 11 proceedings... As of the filing date, the Company had more than $1 billion in cash on hand to support its ongoing operations.
Now prior to COVID-19, say just 3 months ago ... * Hertz had a triple AAA credit rating!!! ... * 10 consecutive quarters of year-over-year revenue growth * 9 quarters of year-over-year adjusted corporate EBITDA growth * #1 in customer satisfaction
To quote Hertz "The financial reorganization will provide Hertz a path toward a more robust financial structure that best positions the Company for the future as it navigates what could be a prolonged travel and overall global economic recovery."
While there may be some recovery occurring, it didn't take long to take down a century old company. Yes Hertz had a lot of debt, but in a growing economy and sector you can get away with that (see growth notes above). Take away demand and prospects for growth and look at how quickly they fall.
Amazing.
SEA Price at posting:
16.5¢ Sentiment: None Disclosure: Held
