DOW JONES NEWSWIRES
Avis Budget Group Inc.'s (CAR) fourth-quarter net loss narrowed
amid the prior year's $1.2 billion goodwill write-down as car
rentals continued to weaken as 2008 came to a close.
Chairman and Chief Executive Ronald Nelson said, "The company
faced an unprecedented set of challenging conditions in the fourth
quarter, as both leisure and commercial volumes declined
significantly, the value of used vehicles dropped precipitously,
and both contributed to sharply lower year-over-year pricing."
Avis said in December it would cut 2,200 positions, or about 7%
of its work force, as it takes steps to reduce annual costs by $150
million to $200 million by the middle of 2009.
Stagnant credit markets, slumping demand for travel and the
automobile industry's hardships are hobbling rental-car companies.
Fewer travelers are renting cars, and the industry is struggling to
find buyers for used automobiles and to secure financing in order
to purchase new ones to replace them.
As a result, Avis, rival Hertz Global Holdings Inc. (HTZ) and
other companies are lobbying Congress to allow them to use Troubled
Asset Relief Program funds to finance new auto purchases.
For the fourth quarter, Avis' net loss narrowed to $121 million,
or $1.20 a share, from $1.06 billion, or $10.16 a share. Net
revenue fell 9% to $1.26 billion amid a 6% decline in both mileage
per day and rental days and time.
Analysts polled by Thomson Reuters projected a loss of 47 cents
on $1.26 billion in revenue.
Avis said 2009 results will be affected by increases in interest
expenses tied to its recent refinancing. The company in December
announced lender commitments to extend $2.45 billion in credit
lines until late 2009, erasing investor concerns that a deal might
not be reached amid the constrained credit markets.
Shares of the industry giant, which said operating conditions
will be weak for at least the first half of 2009, were unchanged at
50 cents in after-hours trading as revenue met analysts'
expectations. The stock through Wednesday was down 28% this month
and is off more than 90% since September.
Competitor Hertz on Tuesday swung to a $1.21 billion quarterly
loss on write-downs as it too experienced declines in volume,
pricing and residual value.
-By Lauren Pollock, Dow Jones Newswires; 201-938-5964;
lauren.pollock@dowjones.com