Avis Budget's second-quarter revenue was only a third of
what it was a year ago, but the company expects revenue for the rest of the
year will at least cover costs.
The car rental company reported revenue of US$760 million
for the quarter, down 67 per cent year over year. Rental days were down 59 per cent
year over year and by about the same rate for rentals both inside and outside
Even so, the company has seen "consistent sequential
week-over-week increases" in rental volume, culminating in "their
best volume to date" in late July thanks to increased leisure activity,
Avis Budget Group CEO Joe Ferraro said. In June, revenue was down 59 per cent
year over year, compared with a 78 per cent decrease in April.
While rentals are nearly all leisure at this point, the
company expects it could gain some new corporate business as companies figure
out their travel programmes amid the pandemic.
"The question is going to be: What do travel policies
look like coming out of this?" CFO John North said during an earnings
call. "Is there an opportunity for us to pick up some share going forward
if corporate travellers are moving around and are more likely to rent a car
than take a flight? Are they more likely to rent a car versus hopping into a
ride-hail vehicle? Those are things we've certainly thought about."
At the same time, Avis Budget has been cutting costs,
including getting rid of more than 100,000 vehicles from its fleet and cancelling
orders on more than 185,000 vehicles, shrinking its fleet by 26 per cent year
over year as of the end of the quarter. It also has cut about 60 per cent of
With those measures and continued growth in demand, the
company expects "both positive cash flow and adjusted [earnings] for the
remainder of 2020," according to Ferraro. Avis Budget Group reported a net
loss of $481 million for the quarter, compared with net income of $62 million
in the second quarter of 2019.