Hertz Global Holdings Inc., the car-rental company which filed for bankruptcy late Friday, said the collapse in air travel amid the coronavirus pandemic hit its biggest source of rental revenue.
“The overall impact of the Covid-19 crisis devastated our revenue," according to a court filing dated Sunday signed by Jamere Jackson, an executive vice president and chief financial officer of Hertz.
The company’s counters are common in airports across the globe. It said that in April, the first full month after the pandemic took hold in the US, its global revenue dropped 73% from the same month in the previous year.
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The bankruptcy filing in Delaware allows Hertz to keep operating while it devises a plan to pay creditors and turn around the business. While all travel-related companies have been hurt by the pandemic, a big part of what’s weighed on Hertz is its strategy of owning or leasing a large portion of its fleet outright instead of acquiring them through buyback agreements with manufacturers.
A “largely frozen market for used cars" prevented it from reducing the size of its rental fleet to lower lease payments, it said in Sunday’s statement.
After the coronavirus pandemic decimated revenue, the car renter sought relief from lenders and a bailout from the U.S. Treasury Department. But while it managed to negotiate a short-term reprieve from creditors, it wasn’t able to work out longer-term agreements.
Hertz’s court petition on Friday listed about $25.8 billion in assets and $24.4 billion of debts, and its biggest creditors include IBM Corp. and Lyft Inc.
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