"It's a very fluid situation right now," said Avis
Budget Group CEO and president Joe Ferraro in its 2021 Q1 earnings call
today in regard to the uncertainty around the potential car rental vehicle
shortage. "I can guarantee you we are doing everything in our power to
ensure we have available fleet to meet the current and future demand."
Travelers Facing a Potential Rental Car Shortage
At the moment, Avis Budget has not run into issues with
vehicle deliveries from car manufacturers. "We're getting in new cars
daily and we've seen our current expectant schedule being satisfied,"
To ensure vehicle availability, the car rental company is
using its older vehicles as efficiently as possible and investing in
maintenance. "One of the silver linings of this pandemic is that our
vehicles just didn't have as many miles put on them, allowing us the
flexibility to hold them slightly more," he said. "We have been
investing more proactively in better maintenance to make sure we get the most
out of our vehicles," he said. Avis Budget's connected vehicles are also
"paying dividends" by alerting staff to maintenance issues in real
In the first quarter, leisure demand was "very strong"
and will continue to be in the summer, according to Ferraro. The corporate
segment continues to improve and length of rental remains high. "Commercial business [corporate] has sequentially
improved month over month as more people get back to their offices and start traveling
a bit," said Ferraro. "The length of rental that we have on
commercial businesses is seemingly still pretty high, so that's been a
Corporate demand likely won't accelerate until after the
summer, according Ferraro. "It's pretty much predicated on… [when]
commercial clients get back to their offices and then how did they feel about
traveling back in," he said. "We do our own internal polling of the
accounts that we do business with, and they are all kind of in that range of 'After
the summer, we get people back into the city office buildings and we get people
thinking about travel maybe in the latter part of the year.' So there's
probably some anticipation."
In the first quarter, Avis Budget Group saw its revenue drop
22 percent year over year. Net loss amounted to $170 million. Avis Budget
achieved adjusted EBITDA of $47 million, the car rental company's best since
2015 and third consecutive quarter of positive adjusted EBITDA since the start
of the pandemic. Avis Budget attributed the achievement to cost discipline and a
double-digit growth of 12 percent in revenue per day in the Americas.
Budget Q4 & Full-Year 2020 Earnings