Hertz is leaving bankruptcy and expects “strong financial results” in 2021

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  • Car rentals were down last year – you can imagine why – and that helped plunge the already struggling Hertz into bankruptcy in early 2020.
  • Though the company has been pessimistic about its chances of getting out of bankruptcy of any value to its shareholders, a bidding war this spring helped its shares worth nearly $ 9, well above the level of below $ 2 during the pandemic.
  • Hertz was also able to sell around 200,000 of its 650,000 vehicles when there was strong demand for used cars, which did not damage the company’s finances.

    The COVID-19 pandemic did not do the car rental company Hertz any good, at least at the beginning. When regular travel almost stopped in early 2020, Hertz filed for Chapter 11 bankruptcy. But like so much during the pandemic, Hertz leveled out and then started to turn, and the company announced last week that it had stepped out of bankruptcy as “financially and operationally stronger company that is well positioned for the future “emerged.

    As a customer loyalty measure, Hertz announced that it will upgrade customers participating in its Hertz Gold Plus Rewards program to Five Star Elite by the end of 2021 and offer double points for rentals by existing members until September 30th.

    The recovery was dramatic indeed, and the group of investors who raised Hertz’s $ 5.9 billion in capital was led by Knighthead Capital Management and Certares Management. Each of these investment firms will now have two representatives on the new Hertz board of directors, according to the Wall Street Journal, which also reported that one of the new independent directors to the board of directors is former Ford CEO Mark Fields.

    The diary called the bidding war for Hertz, which was fought last May, a “rarity in corporate Chapter 11 cases”. In fact, the newspaper reported that Hertz told its shareholders in April that they should expect to get nothing for their stock. But people were optimistic enough about Hertz not only to put the company out of bankruptcy, but also to propel its share price from under $ 2 during the pandemic to just under $ 9 last week. Hertz shares, which trade on the over-the-counter market, traded at over $ 15 before the pandemic New York Times. Hertz common stock traded under the new ticker symbol HTZZ on July 1.

    Part of the reason Hertz made this turnaround was the fact that it sold more than 200,000 of its 650,000 vehicles during the pandemic when demand for used cars was strong and Hertz was making no money at the time as people mostly stopped traveling.

    “When the economy showed signs of recovery earlier this year, we were perfectly positioned to drive a competitive process that would maximize the recovery,” said outgoing CEO Henry Keizer in a statement. “The result – paying our nearly $ 19 billion in full to creditors and returning significant value to our shareholders – is remarkable.”

    Looking to the future, the new Hertz will look a little different than the old, insolvent company. The new CEO Gregory O’Hara said that told diary that new customer service models will emerge that will eliminate the need to queue for the keys to a rental car. He also said Hertz will add more electric and alternative fuel vehicles to its fleet. Hertz is now confident enough about the changes it has made, including cutting costs, negotiating cost concessions at some airport locations, and selling its Donlen fleet leasing business for $ 891 million in cash, which means Hertz is “on track for strong financial results.” in 2021 “is.”

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