Avis Gives Rand The Wheel

<B> Avis Gives Rand The Wheel</B>

Just after it announced the search for a new president was over, the board of directors at Avis Rent A Car Inc.--which has lacked a CEO since the departure of R. Craig Hoenshell last December--suddenly switched gears and appointed A. Barry Rand, who was executive vice president for worldwide operations at Xerox Corp.-- chairman and CEO.

Meanwhile, AutoNation Inc. announced the formation of ANC Rental Corp., the new name for its auto rental division, which will be spun off as a separate public company in January, and the appointment as chairman of Michael Egan, founder and long-reigning CEO of Alamo prior to its acquisition by AutoNation. Michael S. Karsner, currently AutoNation's chief financial officer, will serve as president and CEO of the new company. Analysts widely applauded the moves at both Avis and AutoNation, saying the changes would help bring a much-needed focus to the new, complex challenges faced by each firm.

In the case of Avis, the announcement was a matter of the right person being in the right place at the right time. "It was a fortunate confluence of circumstances" that brought Rand to Avis, said Stephen P. Holmes, a vice chairman of Cendant Corp., Avis's parent company. "By happenstance, I met Barry. He was uniquely qualifed for the role at Avis. He's been in a corporate service environment for the past 30 years at Xerox, when it went through many transformations." At Xerox, Rand managed $18 billion in revenues and 70,000 employees and was instrumental in helping the copier company develop into an aggressive marketing and sales service organization.

That experience is ideally suited to Avis's needs, said Holmes. With its acquisition of PHH Vehicle Management Services Corp. last June, the firm is expanding its business platform from car rentals to an array of transportation services, including vehicle leasing and fuel-card issuance. The three executives who previously oversaw the company--F. Robert Salerno, president of the rental car division, Kevin M. Sheehan, head of corporate and business affairs, and Mark E. Miller, president of the vehicle management services unit--all will report to Rand.

Besides helping Avis maximize its new revenue streams, Rand "also brings a technology background," said Holmes. "There's a tremendous opportunity within Avis and PHH to leverage technologies and deliver even more and better service levels to our customers."

Rand's tenure at publicly held Xerox should prove useful in improving Avis's performance on the Street, which has suffered since the purchase of PHH from Cendant and the subsequent tumbling of its stock. "The biggest challenge for Rand and Avis is proving the acquisition of PHH was a good move and getting the earnings growth out of the business," said Robert Napoli, vice president at Chicago-based ABN AMRO Inc., a large investment banking firm. Unlike many analysts, Napoli believes the PHH acquisition was a "smart long-term move" for Avis in that it provides a lucrative new revenue stream, a necessity given that the airport car rental business ultimately will max out as a source of long-term earnings growth.

Added Jon LeSage, vice president and director of research at Abrams Travel Data Services in Long Beach, Calif., "Rand is there for corporate development, to speak to shareholders and make good deals." This expertise, coupled with the operations know-how of people like Salerno, who rose through the ranks, makes Avis "better positioned than most car rental companies.