Released by the Covid-19 pandemic, US car rental company Hertz declared bankruptcy in the US and Canada on Friday. Its main operating regions in Europe and Oceania are spared.
The Covid-19 pandemic has claimed another victim. For more than a century, the American car rental company Hertz has filed for bankruptcy in the United States on Friday, May 22. Currently, this procedure only applies to its operations in the US and Canada, the group said in a press release.
“The effect of Covid-19 on travel demand has been sudden and dramatic, resulting in a sharp decline in corporate revenue and future bookings,” the group said. “Uncertainty remains regarding the return on revenue and the complete reopening of the market (…) which required today’s measures,” he adds.
Hertz says “immediate action” was taken to prioritize the health and safety of its employees and its customers. Estero, a Florida-based company hired 38,000 people at the end of December, including 29,000 in the United States.
On April 21, Hertz had already announced that it would cut 10,000 jobs in North America, or 26.3% of the global workforce, to save money from uncertainty caused by anti-pandemic measures.
Use of “Chapter 11”
Hertz’s board voted to use “Chapter 11” in a Delaware court, according to court documents. This unit allows a company that can no longer repay its debts to restructure away from creditors. “The financial reorganization will give Hertz a path to a more robust financial structure that will better position the company for the future,” Hertz said.
The group did not mention the amount of its debt, but the Wall Street Journal reported on Friday $ 19 billion and nearly 700,000 vehicles largely unused due to coronavirus.
The pandemic has closed operations and the Group’s management fears that the recovery will soon be realized. In addition, the question remains unanswered about the group’s ability to find its corporate customers, while the pandemic has generalized telecommunications.
Emblematic of the crisis in the United States
According to the manager, the use of Chapter 11 will protect the “value” of the group’s assets and “will give the group the necessary time to create a new, more solid financial base to successfully weather this pandemic and to better position ourselves.”
In recent years, Hertz has struggled with competition, including Avis Budget, and interconnection services, such as Uber, and the company had suffered a fourth annual net loss in succession in 2019. But 2020 had begun well, with sales up 6% in January and 8% in February compared to the same months last year. “Hertz has more than a century of industry leadership and we entered 2020 with strong revenues and profits,” said Paul Stone, the group’s CEO quoted in the release.
This bankruptcy illustrates the magnitude of the crisis currently undergoing the United States, a consequence of the paralysis of the entire economy, especially transportation and tourism, in an attempt to contain the spread of the virus. ” Sudden economic downturn in mid-March demanded 38.6 million people unemployment benefits in the United States.
With AFP and Reuters