DOW JONES NEWSWIRES
Avis Budget Group Inc. (CAR) said it expects to reap big
benefits from its cost cuts, with savings not related to its
headcount now likely to exceed initial expectations, and added that
automotive bankruptcies are likely to have only a minimal effect on
its operations.
The car-rental industry has been hurt as consumers cut back on
travel and tight credit makes it harder to buy and sell
automobiles. The weak economy sent Chrysler Group LLC and General
Motors Corp. (GMGMQ) into bankruptcy protection. In response, Avis,
which had the largest U.S. market share in 2008, has been trimming
costs, cutting jobs and consolidating its regional offices in the
third quarter. Still, the company's first-quarter loss widened as
net revenue fell 17% and the company took a small restructuring
charge.
On Monday, Avis said it has found "incremental opportunities" to
cut costs in field operations, information technology, contact
centers and citation processing.
In all, the company expects annual savings of $200 million from
its efforts.
However, the company said it sees double-digit percentage volume
declines in the second quarter, but comparisons may improve in the
second half of the year. In addition, Avis expects per-unit fleet
costs to rise in the single digits in 2009.
Avis also noted it will adjust its fleet size to match demand,
an effort that should be a little easier as the company said the
used-car market is now performing well. The company said the
asset-backed financing markets are normalizing, helped by the U.S.
Treasury's stabilization programs.
Avis shares were up 2 cents to $4.81 in after-hours trading. The
shares have rebounded very strongly from a low of 34 cents three
months ago but are still down nearly two-thirds from a year
ago.
-By Jay Miller, Dow Jones Newswires; 201-938-2331;
jay.miller@dowjones.com