DOW JONES NEWSWIRES
Avis Budget Group Inc.'s (CAR) first-quarter loss widened as
revenue fell by double digits and the company took a small charge
for restructuring.
In after-hours trading, Avis Budget shares were down 15% at
$3.10, reversing a 12% rise during the regular session. The
company's stock price has soared from a low of 34 cents two months
ago but remains down more than 80% from the middle of last
year.
"Business conditions continued to deteriorate through the first
two months of the quarter," said Chairman and Chief Executive
Ronald L. Nelson, though he echoed competitors in saying that
volumes seemed to stabilize in March.
The rental-car industry has been under unprecedented pressure as
both its customers and automobile suppliers labor under the weight
of the recession and tight credit, and Avis has said it doesn't
expect those conditions to improve through at least the first half
of this year.
In response, the company has been working to cut costs, with the
goal of reaching $150 million to $200 million in annual savings by
the middle of 2009 on top of another $50 million in savings from a
round of cost cutting in the third quarter. On Wednesday, the
company said it expected 2009 savings of more than $100 million in
addition to those cuts, as it continues to cut costs and boost
productivity.
In the first quarter, Avis' loss was $49 million, or 48 cents a
share, compared with a year-earlier loss of $12 million, or 11
cents a share. Excluding restructuring charges and write-downs, the
loss was 44 cents a share in the latest quarter.
Net revenue fell 17% to $1.19 billion as time and mileage per
day revenue fell 2% and rental days fell 17%.
Analysts polled by Thomson Reuters projected a loss of 63 cents
a share on $1.25 billion in revenue.
"Domestic leisure pricing was a bright spot during the quarter,
increasing 4% and 9% across the Avis and Budget brands,
respectively," Nelson said. "Last year's competitive commercial
pricing environment dampened the impact of leisure price increases,
however, resulting in a composite increase in domestic pricing of
3% across all lines of business."
In February, Avis said 2009 results will be hurt by increases in
interest expenses tied to its December deal with lenders to extend
$2.45 billion in credit lines until late 2009. That agreement
assuaged concerns about liquidity, but Standard & Poor's
Ratings Services last month expressed concerns about the company's
ability to refinance $4 billion of debt that matures through
2010.
Earlier Wednesday, rival Dollar Thrifty Automotive Group Inc.
(DTG) said its quarterly loss narrowed on smaller charges despite
an 8.6% decline in revenue. Though that company saw improvements in
daily rental rates and in the used-vehicle market, it remained
cautious in its 2009 outlook.
Hertz Global Holdings Inc. (HTZ) said last week that its
first-quarter loss widened as business continued to suffer and the
company recorded restructuring charges. However, the company also
said rental demand appeared to be stabilizing.
-By Jay Miller, Dow Jones Newswires; 201-938-2331;
jay.miller@dowjones.com