Avis Budget Group fell short of its fourth-quarter guidance, leading CEO Brian Choi to say during a Thursday earnings call that "this was a difficult quarter."
"We fell significantly short of guidance," he added. "That's unacceptable, and I have no excuses to offer. What I will say is that the decisions we made were grounded in the information we had at the time."
The company in the third quarter projected full-year 2025 earnings before interest, taxes, depreciation and amortization on the "low end" of a range of $900 million to $1 billion. Instead, the company announced full-year EBITDA of $748 million.
Choi said that the guidance miss was "entirely in our Americas segment. Our international business executed a meaningful turnaround in 2025 and performed as expected in the fourth quarter."
While government travel immediately declined sharply when the shutdown began, overall commercial demand initially held up, Choi said, citing mandatory airline capacity cuts. "That changed abruptly in November. [Federal Aviation Administration] flight reductions, air traffic control disruptions and extended [Transportation Security Administration] wait times materially reduced discretionary travel as it increased both uncertainty and inconvenience."
The company's Americas commercial rental days went from "mildly down in October to down 11 percent in November," Choi said. "December stabilized, but by then, the damage to the quarter was done."
Instead of growing rental days by 3 percent, as Avis Budget projected in prior-quarter guidance, the company reported flat volume for the quarter.
The second challenge was fleet size and the effect of weakened demand. "The fourth quarter is the most difficult period to sell used vehicles as dealers focus on clearing new model-year inventory," so rental companies usually wait until the first quarter for defleeting, Choi said. "This year, we couldn't wait. Given the speed and magnitude of the demand decline, we chose to defleet in November despite unfavorable market conditions."
Further, revenue per day had been sequentially improving, but "November reversed that progress," Choi added. "RPD deteriorated more than expected. In the Americas, RPD finished the quarter down 3.7 percent. When we guided in October, we thought this would be closer to 2 percent."
ABG also took a $500 million write-down on its electric vehicle fleet at the end of 2025. "We view this action as a deliberate reset that strengthened our balance sheet and reduced future risk," Avis Budget CFO Daniel Cunha said. "This also gave us the opportunity to reassess the economic life of our EV vehicles," and the company shorted the remaining useful life of these cars to about 18 months from 36 months. "The automotive industry is recalibrating how it thinks about EV economics, and we're doing the same."
On a more positive note, "demand has stabilized, fleet is better aligned with volume, and pricing is slowly improving," Cunha said.
Choi added that in addition to the fleet changes—which means the average age of its U.S. rental car fleet will be less than a year old by the end of the first quarter—the company is continuing to build out Avis First, the airport curbside service introduced last year.
"What began as a leisure-focused offering will expand meaningfully into commercial accounts in 2026," Choi said. "Feedback from our early strategic accounts has been strong, and we see significant opportunity to deepen relationships by delivering a more differentiated premium experience."
Avis Budget Q4, Full-Year 2025 Metrics
Avis Budget reported fourth-quarter revenue of nearly $2.7 billion, a 2 percent decrease year over year. Full-year revenue was nearly $11.7 billion, a decline of 1 percent compared with 2024. The Q4 net loss was $747 million versus a net loss of nearly $2 billion a year prior. The 2025 net loss was $929 million, compared with a 2024 net loss of more than $2.6 billion.
Americas fourth-quarter revenue was $2 billion, down 4 percent year over year, while international revenue was $624 million, a 5 percent increase compared with a year prior. Full-year Americas revenue was down 2 percent year over year to $8.9 billion. International revenue for 2025 increased 3 percent to nearly $2.8 billion.
Americas fourth-quarter rental days held steady at 30.9 million versus Q4 2024 and increased 1 percent for the full year to nearly 129.5 million.
Revenue per day was $66.01 for the segment, compared with $68.57 a year prior for the quarter. RPD for the full year declined 3 percent to $68.80.
The Americas average rental fleet for the quarter was 494,300, down from 497,700 in Q4 2024. For the full year, the average rental fleet dropped 1 percent year over year to 507,000.
International fourth-quarter rental days declined 5 percent year over year to 10.4 million and were down 3 percent for the full year to 45.7 million.
Revenue per day for the segment was up 11 percent year over year to $59.89 for the quarter, and up 6 percent to $60.26 for the full year.
The international average rental fleet for the quarter was 166,100 compared with 174,300 a year prior. For the full year, the average rental fleet for the segment was 177,100, versus 184,500 in 2024.
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