Quarantines and other recent coronavirus measures have decimated travel, both globally and domestically. Of course, this has a ripple effect on tangential industries, as well, like car rentals. As developments continue, one report claims that a car-rental giant might be facing some big financial issues.
Hertz has failed to make a lease payment and is exploring a possible bankruptcy, The Wall Street Journal reports, citing sources familiar with the matter. In a statement to Roadshow, Hertz confirmed its financial situation: "We are reducing expenses, deferring capital expenditures, and adjusting fleet levels and staffing based on the significant decline in travel demand," said a Hertz spokesperson via email. "Importantly, conversations with our lenders are ongoing and we remain in discussions with the US Treasury for support."
Money is at the heart of the matter, obviously. With fewer travelers and, thus, fewer car rentals, companies like Hertz are left staring down bills for fixed costs like vehicle payments. The WSJ's report claims that Hertz is currently working with its biggest lenders and "certain holders of its vehicle finance subsidiary's notes" to slow down payments while the company adjusts to the current market. According to a statement Hertz provided the WSJ, however, it has not yet received the support for a payment waiver.
According to the WSJ report, Hertz is currently holding $17 billion in debt, an overwhelming majority of which is attributed to car notes on its rental fleet. Hertz, like competitors such as Enterprise, have laid off staff and tried to get the money together to continue operating during these lean times.
Hertz is still under a payment grace period, which ends May 4, at which point the company may need to take other measures.
First published on April 29.