The US car rental company Hertz has filed for bankruptcy in the Corona crisis. The decline in travel had led to a "sudden and dramatic" drop in sales and bookings, the company said on Saturday night. During the realignment in the crisis, the operation will continue in the course of the procedure under Chapter 11 of the US bankruptcy law. This procedure provides for renovation. The international business of the car rental company in Europe, Australia or New Zealand is not affected by the bankruptcy application.
Hertz is one of the largest rental car companies worldwide and also rents vehicles under the Dollar and Thrifty brands. The company groaned for years under a mountain of debt worth billions.
Maintain operations for the time being
hertz share withThe group could not agree on a long-term reduction in payments with its largest creditors. Hopes for support from the US government for car rental companies have also been dashed. These developments finally forced Hertz to file for bankruptcy. The Wall Street Journal also reported that the company and creditors wanted to negotiate a deal to prevent the fleet from hundreds of thousands of rental cars from being liquidated.
Hertz said the company had more than $ 1 billion in cash to keep operations running. In March Hertz initiated the first measures in response to the Corona crisis. Around 20,000 employees worldwide were given leave or laid off – around half of all employees. The number of vehicles and locations will be reduced. Hertz emphasized that the intention is still to offer customers the same quality and to pay suppliers and employees. Loyalty programs should also continue.
Car rental companies worldwide in distress
Hertz, currently based in Estero, Florida, is more than 100 years old. 22-year-old car salesman Walter Jacobs founded the company in Chicago in 1918 under the name Rent-a-Car, Inc with twelve Ford Model T vehicles. Five years later, the company was taken over by taxi entrepreneur John Hertz and given its current name – which was initially Hertz Drive-Ur-Self System. Hertz has been a pioneer in car rental at the airport since the 1930s. Hertz has been carrying the debt burden with it since it was temporarily taken over by financial investors. A major shareholder is the investor Carl Icahn, known for his hard work towards management, who holds almost 40 percent of the shares.
Hertz competitors such as Avis also made severe cuts in the corona crisis and increased their cash reserves. Meanwhile, the largest German car rental company Sixt has recently been in the red and has "planned a devastating second quarter" – but does not want to cut jobs or close stations. He expects business to pick up again in the second half of the year, said CEO Erich Sixt.
Further bankruptcies in the US economy
The crisis has severely affected the US economy. Just about a week ago, the 118-year-old J.C. Penney filed for bankruptcy. After the bankruptcy filings of the chain stores Neiman Marcus and J. Crew, J.C. Penney is the largest corona victim in US retail to date. Around 85,000 people work for the company. J.C. Penney still has over 800 stores, many of which are at the heart of American malls.
Since the US coronavirus pandemic escalated in March, more than 38 million people have lost their jobs, at least temporarily, more than ever before in such a short space of time. The United States is in a severe economic crisis because of the pandemic. President Donald Trump is urging the US states to loosen protective measures as quickly as possible in order to get the economy going again before the presidential election in November.
. (tagsToTranslate) car rental (t) Hertz (t) traffic