Car Rental Pioneer Hertz First Major Travel Company to File for Bankruptcy Amidst Coronavirus Pandemic

By Paul Riegler on 23 May 2020
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The economic effects of the coronavirus claimed its first major travel company as on Friday as Hertz Global Holdings and several of its U.S. and Canadian subsidiaries filed for bankruptcy protection under Chapter 11. The company is the number two car rental agency in the world after Avis.

The company said it has over $1 billion in cash on hand to support ongoing operations.

“Today’s action will protect the value of our business, allow us to continue our operations and serve our customers, and provide the time to put in place a new, stronger financial foundation to move successfully through this pandemic and to better position us for the future,” said newly appointed CEO Paul Stone.

The filing in the U.S. Bankruptcy Court for the District of Delaware came as no surprise.  Hertztraditionally earns a large part of its revenue from rentals at airports, and saw that figure plummet amidst the coronavirus pandemic. It missed some $400 million in lease payments on its fleet in late April and was able to persuade its lenders to give it until end of business Friday to come up with an acceptable payment plan, a move that ultimately failed, as was reported in Frequent Business Traveler.

Hertz had started off the year on a positive note with a 6% increase in revenue in the first two months. The pandemic, however, dealt it “a rapid, sudden, and dramatic” blow, it said.

Originally known as Rent-a-Car, Inc., the company was founded by Walter Jacobs in Chicago in 1918. It began operations with one dozen Ford Model Ts. In 1923, it was purchased and renamed by John D. Hertz, who owned the Yellow Truck and Coach Manufacturing Company. General Motors acquired Hertz in 1926 and John Hertz reacquired the company in 1953 and there were multiple changes in ownership in the course of the next half century that included United Airlines, Ford.

The filing does not include operations in Europe, Australia, and New Zealand, and all Hertz locations regardless of location continue to remain open, the company said.  It does impact Hertz units Dollar Rent a Car and Thrifty Car Rental.

(Photo: Accura Media Group)

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