Hertz has filed for bankruptcy protection, unable to withstand the coronavirus crisis that has crippled global travel and with it, the heavily indebted 102-year-old car rental company’s business.
“We’ve basically wiped out a decade worth of job creation in a month and a half,” an economist says. May’s unemployment figures will probably look even grimmer.
In late March, Hertz shed 12,000 workers and put an additional 4,000 on furlough, cut vehicle acquisitions by 90% and stopped all nonessential spending. The company said the moves would save $2.5 billion per year.But the cuts came too late to save Hertz, the nation’s No. 2 auto rental company founded in 1918 by Walter L. Jacobs, who started in Chicago with a fleet of a dozen Ford Model Ts. Jacobs sold the company, initially called Rent-A-Car Inc., to John D. Hertz in 1923.
In a note to investors in late April, Jefferies analyst Hamzah Mazari predicted that rival Avis would survive the coronavirus crisis, but Hertz had only a 50-50 chance “given it was slower to cut costs.” On May 18, Hertz named operations chief Paul Stone as CEO and announced that Marinello would step down as CEO and from the company’s board. Mazari called the step unusual just days before a potential bankruptcy filing. He also noted that CEO changes have been common at Hertz since financier Carl Icahn entered the company in 2014.
Icahn’s holding company is Hertz’s largest shareholder, with a 38.9% stake in the company, according to FactSet.Deutsche Bank analyst Chris Woronka credited Marinello with reigniting Hertz’s revenue growth, writing in a note to investors that it rose 16% in 2018 and 2019 combined.
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