Hertz has buyers and a plan to get out of bankruptcy
The deal announced on Tuesday would require the two buyers, Knighthead Capital Management and Certares Opportunities, to buy at least the majority and up to 100% of the company. The plan would need bankruptcy court approval.
But like many companies that were forced into bankruptcy in 2020, Hertz struggled with losses and other competition concerns long before the pandemic.
In 2020, Hertz lost $ 1.7 billion, up from $ 55 million in 2019. Revenue plunged 46%, or $ 4.5 billion last year. And it had only brought in two profitable years over the six-year period from 2014 to 2019.
“We have made excellent progress… repositioning our business as we prepare for increased travel demand as the pandemic abates,” said Paul Stone, CEO of Hertz. “The support of the [proposed buyers] demonstrates confidence in Hertz’s growth potential; in addition, they bring valuable experience to the travel and leisure industry. “
The company that comes out of bankruptcy will be much smaller. Hertz cut around 12,000 U.S. employees and 2,000 other international employees last year, closed sites and sold off nearly 200,000 vehicles, while curbing the purchase of new vehicles.
But he will not necessarily be out of the woods with his exit from bankruptcy.
No one really knows when air travel will resume its normal course. And business travel, a major driver of car rental, is expected to remain depressed from pre-pandemic levels for several years.