Car rental company Hertz has taken further action to try and soften the blow from the coronavirus pandemic.
Hertz Global Holdings, along with some of its North American and Canadian subsidiaries, filed voluntary petitions for reorganisation under Chapter 11 in the US Bankruptcy Court late last week.
“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 said in a statement.
“Hertz took immediate actions to prioritise 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 reopen for sales, which necessitated today’s action.
“The financial reorganisation 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 the bankruptcy protection proceedings. The company’s franchised locations also are not included.
All of Hertz’s businesses globally, including its Dollar, Thrifty, Firefly, Hertz Car Sales, and Donlen subsidiaries, are open and serving customers.
Furthermore, all reservations, promotional offers, vouchers, and customer and loyalty programs, including rewards points offered by the company and its subsidiaries are expected to continue as usual.
As of the filing date, the company had more than US$1 billion ($1.5 billion) in cash on hand to support its ongoing operations.
Depending upon the length of the COVID-19 induced crisis and its impact on revenue, Hertz said it may seek access to additional cash, including through new borrowings, as the reorganisation progresses.
Hertz had already taken a number of other actions to help it stay afloat prior to filing for bankruptcy protection.
These included reducing planned fleet levels through vehicle sales and by cancelling fleet orders, consolidating off-airport rental locations, deferring capital expenditures and cutting marketing spend, and implementing furloughs and layoffs of 20,000 employees (approximately half of its global workforce).
The bankruptcy protection filing comes not long after Hertz announced the resignation of president and CEO Kathryn Marinello, who plans to continue with the company in a consulting position for up to one year to support a smooth transition.
Replacing Marinello is Paul Stone, who was most recently Hertz’s executive vice president and chief retail operations officer for North America.
Prior to Hertz, Stone served as senior vice president and chief retail officer at Cabela’s, one of North America’s leading outdoor recreation retailers.
Featured image: iStock/tupungato