TOPLINE
Hertz, one of the largest car rental companies in the U.S., filed for bankruptcy Friday after the coronavirus devastated its business, making it another major company that has filed for bankruptcy amid the pandemic.
An hertz logo seen at the Gdansk Lech Walesa Airport.
Photo by Mateusz Slodkowski/SOPA Images/LightRocket via Getty Images
KEY FACTS
Hertz will file for Chapter 11 bankruptcy, but will remain in business during the proceedings using its $1 billion cash on hand.
Hertz’s Europe, Australia and New Zealand operations aren’t included in the bankruptcy filing.
The company attributed the move to the abrupt decline in revenue and future bookings due to plummeting travel demand.
The company said it tried to get aid from the federal government, but “access to funding for the rental car industry did not become available.”
Before the filing, Hertz had already laid off 12,000 workers and furloughed 4,000 more during the pandemic.
Legendary investor Carl Icahn owns the majority of Hertz’s shares, nearly 39%.
crucial quote
“With the severity of the COVID-19 impact on our business, and the uncertainty of when travel and the economy will rebound, we need to take further steps to weather a potentially prolonged recovery,” Hertz President and CEO Paul Stone said in a statement. “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.”
NEWS PEG
The transportation business is in dire financial straits because of the pandemic. Hertz competitor Avis as well as ride-hailing giants Uber UBER and Lyft LYFT have had to lay off thousands of workers to keep afloat. Retailers JC Penny JCP and Neiman Marcus also filed for bankruptcy in recent weeks because of the coronavirus.
Key background
The company was founded over 100 years ago with a dozen Ford Model Ts as its first fleet. Walter Jacobs, who founded the company in Chicago, sold it to John D. Hertz in 1923.
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Source: Forbes Business
