Hertz, Dollar Thrifty net incomes up, Avis Budget down in Q3
By Danny King
Hertz Global Holdings and Dollar Thrifty
Automotive Group both reported higher
third-quarter earnings than a year ago, as
Hertz recorded quarterly record worldwide
car-rental revenue, while Dollar Thrifty
cut vehicle-depreciation costs because of a
strong used-car market.
Avis Budget Group’s third-quarter profit
fell as higher costs stemming from its October acquisition of Avis Europe offset a
jump in overseas demand.
Hertz, the second-largest U.S. car rental
company behind Enterprise Rent-A-Car,
said Q3 profit jumped 33%, to $206.7 million from $155.3 million a year earlier.
With a jump in transaction days both
in the U.S. and overseas, Hertz’s revenue
rose 11%, to $2.43 billion. The company’s
worldwide car rental revenue rose 7% from
a year earlier, excluding the effects of for-eign-currency changes, to a company record $2.11 billion.
to address potential antitrust issues but
on Oct. 27 withdrew its offer, citing Dollar
Thrifty’s share-repurchase plan and market
Avis Budget incurs acquisition costs
Meanwhile, Avis Budget Group’s Q3
net income fell 9%, to $82 million, as the
third-largest U.S. car rental company incurred $73 million in expenses related
to the Avis Europe acquisition. Avis paid
about $1 billion for Avis Europe and will
repay some of that company’s debts. Avis
Budget’s operating and marketing costs
also increased faster than revenue, which
rose 7.3%, to $1.62 billion.
Such expenses more than offset the effect of higher demand for the company’s
cars, especially overseas. International car-rental revenue jumped 16% from a year
earlier, while domestic car rental revenue
rose 6% on a 5% increase in rental volume
and a 7% increase in ancillary revenue.
Domestic car rental pricing fell 1%.
its U.S. in-surance-replace-ment business by 21% from a year earlier,
while rental volume at the company’s Advantage Rent-a-Car budget brand jumped
Overall, Hertz’s jump in rental-transac-tion days more than offset a drop in daily
rental rates. Transaction days were up 12%
in the U.S. and 7.7% overseas, while global
revenue per transaction day fell 5.2%. Additionally, the company cut interest expenses by 16% from a year earlier.
Dollar Thrifty income up 35%
Dollar Thrifty Automotive Group’s Q3
net income jumped 35% compared with
a year earlier, to $66.6 million, as the No.
4 U.S. car rental company’s revenue rose
1.8%, to $451.7 million.
Depreciation costs, which largely reflect
what prices Dollar Thrifty receives for the
cars it sells back into the market, fell 26%
from a year earlier as Q3 U.S. used-car prices rose 4.5% from a year earlier, according
to the Manheim Used Vehicle Value Index.
Vehicle-rental revenue rose 2.4% from a
year earlier as a 4.1% increase in rental days
more than offset a 1.7% drop in daily rates.
The company also advised that Q4 revenue
would increase 1% to 2% from a year earlier.
Dollar Thrifty said last month that it
would remain a standalone entity after
concluding that Hertz Global Holdings’
most recent acquisition proposal, an offer
worth about $2.1 billion in early May, was
insufficient because it didn’t guarantee that
the transaction wouldn’t be opposed by
U.S. regulators because of potential antitrust issues.
Hertz first attempted to acquire Dollar
Thrifty in April 2010 and subsequently
engaged in a bidding war with smaller
competitor Avis Budget Group before the
latter bowed out of the process early last
month to focus on the Avis Europe acquisition.
Hertz initially said it would continue to
work with the Federal Trade Commission
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NOVEMBER 7, 2011