Many of them faced bankruptcy and plummeting stock prices. Recently, Hertz has emerged from bankruptcy stronger than ever.
The pandemic devastated the rental car industry
At the start of the COVID-19 pandemic, lockdowns and border closures tanked almost all travel-related businesses. In May of 2020, the plunge in air travel forced Hertz to file for bankruptcy.
CNNreported when the news hit, Hertz had been in business since 1918 and had survived other economic calamities, such as the Great Depression.
As a result of the pandemic, the number of people passing through TSA checkpoints at U.S. airports fell by 94% since 2019. This had a severe impact on rental car companies, which rely on airport rentals for two-thirds of their revenue. Hertz had to lay off 12,000 workers and furlough another 4,000.
Some big investments and careful planning helped Hertz
Car and Driverreported that Hertz has gone through a dramatic rebound. Hertz share prices had sunk below $2 during the worst of the pandemic, but are worth close to $9 these days.
The company wasn’t confident that it could emerge out of bankruptcy but it attracted an investment of $5.9 billion from Knighthead Capital Management and Certares Management. Each firm will now have two representatives on the new Hertz board of directors to help steer the company's rebirth.
Hertzreported that the new funds had allowed it to reduce corporate debt by 80%. This allowed the company's Plan of Reorganization to be approved by the bankruptcy court. Judge Mary Walrath said that the outcome "surpasses any result that I've seen in any Chapter 11 case that I've faced in my 20-plus years."
Hertz plans to implement new customer service models so customers don’t have to wait in line to get keys to a rental car. In addition, the company will add more
electricand alternative-fuel cars to their fleet.
The future looks bright for rental car companies
As travel restrictions lifted and more people started to take trips again, rental car demand has been far surpassing supply. Demand is especially high due to continued vehicle shortages caused by supply chain problems and manufacturer slowdowns.
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