Hertz: Car rental firm files for US bankruptcy protection

[bucolic_frolic]

Source: BBC via Yahoo Finance

The firm, which earns much of its income from car rentals at airports, said it had been affected by the sharp downturn in global travel.

It will continue to operate while restructuring its debts.

Hertz's international operations in Europe, Australia and New Zealand as well as its franchised locations in the US are not affected.

The company - which began operating a century ago in Chicago with a dozen Model T Ford cars - had already furloughed or laid off 20,000 employees, or around half of its global workforce, in response to the pandemic.

Read more: https://finance.yahoo.com/news/hertz-car-rental-firm-files-050332559.html

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Wow, is this country going to be flooded with used cars. From rental companies, from people going belly up on their car loans, from people taking the recession to repair their existing vehicles. A local car repair place has a parking lot full of used vehicles, I don't recall seeing any 6 months ago. Inflation? We're going to see deflation in some things first.

Did Hertz ever really shed the iconic image of OJ running through airports?

[gab13by13]

1. Didn't Hertz get any bailout money?

This is certainly a move to cut workers wages and benefits is my guess.

I totally agree with you about deflation and no one talks about that.

[progree]

2. Social distancing could be a boon to used car sales, Yahoo Finance, 5/22/20

https://finance.yahoo.com/news/social-distancing-could-be-a-boon-to-to-car-sales-181642918.html

... “We’ve seen a huge increase of people coming to shift.com,” says George Arison, founder and co-CEO of the peer-to-peer car marketplace. ”It's been kind of incredible.”

Arison told Yahoo Finance’s The First Trade business picked up after initially declining due to shelter-in-place measures to contain the virus.

“Within a couple of weeks, sales came back. We finished April down, only about 11% off of February and May is now trending to equal where we had hoped April would be, pre-pandemic, with pretty substantial growth over last year,” said Arison.

... “A lot more subprime applicants for financing for example, a lot more searches for domestic versus foreign made cars, and people are buying cheaper vehicles” he said, noting customers are spending about $1500 less per purchase — eyeing starting prices of around $14,000 versus $15,500 pre-pandemic.

... Arison believes people will use less ride-sharing services such as Uber (UBER) or Lyft (LYFT) due to social distancing.

Some people are even required to avoid it. The New York Stock Exchange told its employees they need to avoid public transportation when some of them go back to the floor when it re-opens next Tuesday.

I'm closely watching what is happening to our local public transportation system with great fear and horror. And watching state and local finances going way south. Anyone thinking public transit is going to operate indefinitely at maximum 1/4 capacity for social distancing is fooling themselves.

[MichMan]

3. Mass transit usage needs to be re evaluated

Doesn't make sense with a pandemic to have people crammed into subways, buses, and trains. Need to keep everyone 6 or more feet apart or avoid them completely


I wonder how many of the infections were transmitted there?

[progree]

5. People have to get to work, and I don't think car pools and van pools are very healthy

and most people can't afford Uber/Lyft for their commutes, and certainly not healthy riding with a new driver on each trip, and perhaps one or more fellow passengers.

Yes I know more people will work from home than before, but many tens of millions won't.

And a big jump in cars on the road by people who formerly took public transit -- when the economy gets back to say 90% or more -- whenever that is ... well, we'll see what happens to road congestion. The righties keep claiming public transit increases road congestion, but I've always doubted it. I hate driving my car when stuck behind a bus, but then I think what if those 40 people were in say 20 cars, that would be a hell of a lot worse.

Not to mention greenhouse gas emissions ... but nobody cares about that anymore.

[MichMan]

6. I would rather put up with road congestion than getting a infectious disease

I think urban living in big cities has become a whole lot less appealing to a bunch of people

[gab13by13]

8. Many people don't have a choice

to drive a car instead of taking mass transit. Many don't even own a car and can't afford one. Even if they own a car they can't afford parking fees, if there is a place to park.

[progree]

11. Yes, parking fees - eats up at least one hour of wages of a low wage worker per day

and more greenhouse gas emissions. MAGA!

[SWBTATTReg]

13. Just because an area is urban doesn't mean the risk is greater...seems like outbreaks are booming...

out there in rural areas too, which could really drain medical resources much faster than in urban areas. And I literally can go for months and months without seeing my neighbors (from an 'urban' resident)...

[Steelrolled]

19. They somehow manage in Japan

[paleotn]

4. The pandemic is creating structural changes in our entire economy....

Business models that worked in the pre-pandemic world won't work for a while, if ever again. Some are changing in ways few could have predicted. On the flip side, whole new businesses are being created for markets that didn't exist pre-pandemic.

The only thing Chinese that I blame for this is the old Chinese curse...."May you live in interesting times." Somebody cursed us and I'm sick and tired of living in "interesting times." Can we have dull and boring again, please?

[machoneman]

15. Yes, big structural changes that will be permanent are in the works.

Hertz, though suprising to me, is only the first of many off-brand airport located rentals firms that will go under. The cheaper for consumer alternates to the Hertz's of the world will go under very soon, gone forever. Now, layer that business closing model over a lot of other industries that rely solely on travel and wow, the pain will be everywhere. Suitcase makers, travel accessories, new clothes many buy for a vacation trip, you name it.

Then, extend this example to all the work at home folks. Far less train travel (a biggie here in Chicago), car parking lots downtown, tax revenues from parking fees, highway taxes in the form of tolls, gas/tires/maintenance on infrequently used cars. The examples of bad things to come are endless.

[rickford66]

7. The average family is expected to save for retirement or emergencies.

These large corporations don't have a piggy bank ? Just as banks are required to have reserves, large public traded corporations should also be required to have reserves and if they run out, the pensions of the officers can be borrowed from.

[gab13by13]

9. The large corporations got bailed out,

1n 2008, 2017, and 2020. In 2008 and 2017 they used the money for stock buy backs and CEO compensation. Why would they need to put money into a rainy day fund when they keep getting bailed out, keep getting rewarded for their incompetence?

[Proud liberal 80]

10. Yeah

You always hear that most Americans are living paycheck to paycheck....it looks like most companies live the same way...

[melm00se]

18. According to their Q1 financials

Hertz has cash/cash equivalents of $1,017,000,000 and receivables of $2,095,000,000.

Their net debts are $17,737,000,000.

[ProfessorGAC]

23. It's Worse Than That

Debt to equity is 13.81. The company has been funding operations with debt for several years.
There's something wrong with the operations there. Something really badly wrong.

[Scalded Nun]

12. Why are these companies going bankrupt so early on?

They surely have at least 3 months of cash reserves in case of emergencies. At least that is the bullshit they like to throw in people's faces during emergencies.

[machoneman]

16. No, they see the wave of bad news not only for 2020 but well beyond that.

Travel, no matter how much that Orangeheaded sheepdip in the WH bleats, will be down for years to come, likely 5+ years until it gets back to normal. That's why it was wise to file now.

Keep in mind it took almost all of our last real President's 8 year run (God, do we miss him!) to get the economy back after the October 2008 crash. And this new crash was and remains far, far worse!

[ProfessorGAC]

24. They've Got A Billion In Cash

Their debt load exceeds $20 billion.
Service on debt is $1.5 billion per quarter.
They, in fact, do not have enough cash to even cover debt payments for a quarter, let alone operating costs.
Reduced cash positions and treasury stock purchases are plaguing many corporations. It's been in vogue for around 20 years, but it assumes zero chance of uncontrollable extrinsic forces.
It's a Pollyanna view of business, and they got pinched for it.
It's an artifact of the 80s b-school mantra of "shareholder value is all that matters" philosophy.

[Marcuse]

14. A legendary "underdog" advertising campaign

[C Moon]

17. That hurts.

[iluvtennis]

20. Seriously? what'd they do with that BIG TAX CUT trump gave them in 2017, 2018, & 2019. nt

Last edited Sat May 23, 2020, 11:17 PM - Edit history (1)

[Raine]

21. Stock buy backs

of their own corporations is what I've heard.

[iluvtennis]

26. Yep. But guess greed prevented them from selling some stocks to take profits and put

in safe bank account. I have no sympathy for them and we taxpayers shouldn't bail them out.

[ProfessorGAC]

22. More Than $20 Billion in Debt

A D/E of 13.8, so equity of $1.4 billion! 7% of market capitalization is actual owner equity. The other 93% is debt.
Their return on invested capital is 1%.' It was 6% in 2014.
The pandemic didn't actually kill them. It just unplugged the life support.
This company had to be being run like crap for years.

[iluvtennis]

25. Wow. nt