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Car rental volumes at airports nearly ended Hertz’s quarter-by-moment (NYSE: HTZ), forcing the leasing giant to seek debtor financing on property to survive.
Global revenue fell 67% to $832 million after air travel was decimated by the coronavirus pandemic. Although it has $1.4 billion in cash, which deserve to be allowed until December 31, unless travel and tourism recover and you can get extensions of your lenders’ foreign car bills, which are expected to begin after September 30, that cash has been earned. That won’t be enough for the next 12 months.
As a result, Hertz will continue with new financing programs, adding loans to borrowers in vehicle ownership and financing options.
Hertz had tried to sell $500 million in shares in June, but the offer to sell what would have been virtually worthless attracted the attention of the SEC, which forced Hertz to withdraw the offer. This has still left Hertz with the need to increase the budget to survive, so he is now in favor of these new avenues of investment.
Hertz gets the most out of his money, about two-thirds of the total, with car rental at the airport. However, after the COVID-19 outbreak halted air travel, rents fell 82% compared to last year.
Hertz began making the first of his monthly bills last month with $650 million in hires owed on his operating leases. Although it sold 100,000 cars in June and July to help cover those costs, the company is expected to sell more than 180,500 more cars through the end of the year.
The auto rental giant said it lost adjusted earnings of $587 million before interest, taxes, depreciation and amortization in the current quarter, or $3.51 consistent with the stock, worse than Wall Street’s forecast of a $2.33 loss consistent with the stock.