After more than a century in business, global car rental company Hertz has filed for bankruptcy in the US and Canada becoming the latest economic casualty of the coronavirus pandemic Friday.
The Wall Street Journal reported Friday that Hertz held debts of roughly $19 billion, in addition to nearly 700,000 vehicles sitting idle because of the coronavirus.
However, its main international operating regions, including Europe, Australia and New Zealand, were not included in the US Chapter 11 filing.
Chapter 11 is a mechanism that allows a company that is no longer able to repay its debt to restructure itself without creditors.
Established in 1918 with only a dozen cars, the global car rental giant had survived the Great Depression and numerous American recessions.
Hertz said it took “immediate action” to prioritize the health and safety of employees and customers and eliminate “all non-essential spending”.
“The impact of COVID-19 on travel demand was sudden and dramatic, causing an abrupt decline in the Company’s revenue and future bookings,” Hertz said in a press release.
However, uncertainty remains as to when revenue will return and when the used-car market will fully re-open for sales, which necessitated today’s action,” Hertz said in a press release.
Hertz had already cut 10,000 jobs in North America, or 26.3 percent of its global workforce, to save money after the coronavirus shutdowns paralyzed travel and crippled the economy.
“The financial reorganization will provide Hertz a path toward a more robust financial structure that best positions the Company for the future as it navigates what could be a prolonged travel and overall global economic recovery,” the Hertz statement said.
Hertz’ franchise sites, which are not owned by the company, are also not included in the Chapter 11 proceeding.
But in recent years the company has struggled with competition — including Avis Budget and carpooling services such as Uber.
Source: AFP
