Both Avis Budget Group and Hertz Global Holdings reported revenue growth and a more favorable pricing environment in the first quarter. Both also said, however, that corporate car rental rates are not on the rise.
For Avis Budget, revenue in the Americas rose 3 percent year over year to $1.35 billion. Rental days increased 3 percent, and pricing was flat. CFO Martyn Smith said commercial volume was flat, though business from small and midsize enterprises showed "strong growth."
U.S. revenue at Hertz rose 5 percent year over year to $1.43 billion. Transaction days increased 6 percent, and revenue per rental day decreased 1 percent year over year. CEO Kathryn Marinello said the company, having improved the quality of the cars and service and enjoying the support of a strong commercial team, has been winning back more corporate share in recent months. However, she said, "There's clearly pressure downward on pricing" for corporate rentals at airport locations.
Even so, both companies said tighter fleets and demand growth boded well for higher pricing outside that commercial business. Avis Budget CEO Larry De Shon said pricing on the leisure side was particularly strong from mid-February through March.
Outside the Americas, Avis Budget rental days rose 9 percent year over year, as revenue per rental day excluding exchange rate effects decreased 2 percent. That lower pricing stemmed from growth in the company's light commercial van business and growth in markets where ancillary revenue tends to be lower, Smith said. Commercial demand outside the Americas increased 11 percent and was strongest in Italy, Australia and Spain, he said.
For Hertz, transaction days outside the U.S. dipped 2 percent, as revenue per day rose 5 percent. CFO Tom Kennedy attributed the decline to the sale of its operations in Brazil to Localiza last year. Excluding that, transaction days rose 4 percent and revenue per day increased 2 percent. Strong leisure demand in Europe has pushed pricing up there, Kennedy said.
Avis Budget reported a net loss of $87 million for the quarter, an improvement of $20 million from the prior year. For Hertz, the loss was $202 million, also an improvement of about $20 million.
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