Hertz Files for Bankruptcy
Hertz, one of the nation’s largest car-rental companies, has officially filed for bankruptcy protection today. The company had about $19 billion in debt and nearly 700,00 vehicles that have been largely sitting in parking lots due to the coronavirus pandemic and the lack of travel demand it caused. Hertz has been renting cars since 1918.
By declaring bankruptcy, Hertz says it intends to stay in business while restructuring its debts. It hopes to emerge from this as a healthier company financially.
“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,” the statement says.
This marks one of the highest-profile casualties of the pandemic’s impact on travel, but Hertz also had challenges before the current economic crisis. The company had a loss of $58 million last year, its fourth consecutive annual net loss.
All Hertz Businesses Remain Open and Serving Customers
All of Hertz’s businesses globally, including its Hertz, Dollar, Thrifty, Firefly, Hertz Car Sales, and Donlen subsidiaries, are open and serving customers. All reservations, promotional offers, vouchers, and customer and loyalty programs, including rewards points, are expected to continue as usual. Customers can count on the same high level of service and reliability, including new initiatives such as “Hertz Gold Standard Clean” sanitization protocols to provide additional safety in response to the COVID-19 pandemic.
“Hertz has over a century of industry leadership and we entered 2020 with strong revenue and earnings momentum,” said Hertz President and CEO Paul Stone. “With the severity of the COVID-19 impact on our business, and the uncertainty of when travel and the economy will rebound, we need to take further steps to weather a potentially prolonged recovery. Today’s action will protect the value of our business, allow us to continue our operations and serve our customers, and provide the time to put in place a new, stronger financial foundation to move successfully through this pandemic and to better position us for the future. Our loyal customers have made us one of the world’s most iconic brands, and we look forward to serving them now and on their future journeys.”