First-quarter revenue increased approximately 6 percent, year over year, for both Avis Budget Group and Hertz Corp., and both car rental companies said they are continuing to tighten their fleets.
Avis' first-quarter revenue was $1.4 billion, while Hertz had first-quarter revenue of $2.04 billion and adjusted pre-tax income of $17.1 million. Avis Budget Group had a pre-tax loss of $18 million, or $5 million when mark-to-market losses on interest rate hedges are excluded.
"It was a very unusual period," said Avis Budget chairman and CEO Ronald Nelson. "From an earnings standpoint, it was not our finest hour. We expected prices to soften and we weren't disappointed."
The company cited a slow January and February, with year-over-year pricing down 7 percent in January and 1 percent in February. However, pricing was up 2 percent in March.
"We don't expect down pricing for the rest of the year," Nelson said.
Hertz was able to offset soft volume and pricing pressures in the first quarter by controlling costs, said Mark Frissora, chairman and CEO. "Given the overall weak economy, I'm very pleased with our first-quarter performance," he said.
Chauffeured transportation company Carey International continued to perform to the Avis' expectations, said David Wyshner, Avis' executive vice president and CFO. Avis invested $60 million in Carey last October, giving the car rental company 45 percent of Carey's common stock. Avis has an option to increase to 80 percent within a year
(BTNonline, Nov. 19, 2007)."Strategically, the investment continues to be very attractive," he said.
Worldwide, Hertz's revenue per day declined by 2.6 percent, stemming partially from driving business to off-airport locations.
"In the United States, the profitable mix-shift of airport to off-airport accounted for 22 percent of the RPD contraction," he said. The drop in revenue per day was balanced by a 4.6 percent increase in transaction days.
Hertz also improved its domestic and international fleet efficiency by 1 percent year over year, Frissora said. The company has 70 percent of its worldwide fleet on a non-program basis and will look to further tighten its fleet.
Avis expects that overall fleet levels will remain fairly tight throughout the summer, said president and COO Robert Salerno. With pricing increases expected Avis is "comfortable surrendering some volume in favor of price," he said.