Hertz Lays Off Thousands, Defleets As Air Cuts, Economy Hit Demand

Hertz Global Holdings, beginning in the fourth quarter of 2008 and through the first quarter of 2009, is eliminating more than 4,000 jobs across its business units. The cuts compound a 9 percent reduction in headcount last year through the third quarter, which represented 2,700 jobs. When compared with August 2006, the total cuts will reduce headcount by 32 percent.

Hertz has not yet detailed specific performance for its most recent quarter, ending Dec. 31, but chairman and CEO Mark Frissora said in a statement last month, "Volume, pricing and residual values continued to decline during the most recently completed quarter, and we cannot predict when our markets will improve. As a result, we continue to take aggressive action to align our costs, including wage and benefit expenses, with business conditions."

Hertz CFO Elyse Douglas, during a presentation last month at the Auto Analysts of New York Conference in Detroit, said Hertz is "religiously right-sizing the business to meet the demand."

Though she noted that demand is down amid a slowing economy and reduced airline capacity, the industry—bolstered by industry consolidation, improved fleet strategy and better management—is "better positioned than in earlier downturns," Douglas said.

Douglas detailed some of Hertz's actions to "right-size" business, but gave little guidance into fourth-quarter performance, results for which the company officially will announce this month. Still, she pointed to "accelerated fleet reductions," noting the fleet was 4.5 percent smaller by the end of third-quarter 2008 than in the same period in 2007. Douglas said the pace of Hertz's de-fleeting was "a bit ahead of where our competitors were at in the third quarter," adding that Hertz also closed 80 rental locations, "based on underperformance as the result of reduced demand."