Hertz has filed for bankruptcy protection, unable to withstand the Covid-19 pandemic that's crippled global travel and with it, the heavily indebted 102-year-old auto rental company. Hertz's principal worldwide operating regions and franchised locations are not included in the filing, the statement said.
"The impact of Covid-19 on travel demand was sudden and dramatic, causing an abrupt decline in the company's revenue and future bookings", Hertz said on Friday.
United States airlines have so far avoided similar fates after receiving billions of dollars in government aid, an avenue Hertz has explored without success. Forbearance and waiver agreements on the missed payments were set to expire on May 22.
Hertz has around $US19 billion in debt, including $US4.3 billion in corporate bonds and loans as well as $US14.4 billion of debt backed by their vehicles, according to The Journal.
Hertz, whose parent company, Hertz Global Holdings Inc., also owns rental brands Dollar and Thrifty, had said in a regulatory filing in April that it was considering seeking bankruptcy protections after it "did not make certain payments" on its operating lease.
CEO Kathryn Marinello resigned last Saturday, and the company's board of directors named Paul Stone, who previously served as the company's executive vice president and chief retail operations officer for North America, to step in for Marinello.
"Management has concluded there is substantial doubt regarding the company's ability to continue as a going concern within one year from the issuance date of this quarterly report", it said.
Hertz's woes are compounded by the complexity of its balance sheet, which includes more than US$14 billion of securitised debt. The US Treasury has started assisting companies as part of an unprecedented US$2.3 trillion relief package passed by Congress and signed into law.
Hertz has halted about 90% of its new vehicle orders for 2021, a move that could pinch automakers as the vehicle rental segment typically brings about 10% of auto sales for the year.
Even before the pandemic, Hertz and its peers were under financial pressure as travelers shifted to ride-hailing services such as Uber.
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