Avis Stock Higher - Report Reflects Cost Cuts, Smaller Fleet

Avis reported a narrower-than-expected adjusted loss as the rental-car provider shrank its fleet and cut costs.
Author:
Publish date:

Car-rental provider Avis Budget  (CAR) - Get Report reported a narrower-than-expected adjusted second-quarter loss, reflecting cost cuts and a smaller fleet.

The company said it capitalized on a "rapidly recovering used car market", enabling it to sell nearly double the number of vehicles it had targeted in its operational plan. 

The Parsippany, N.J., company reported a loss of $388 million, or $5.60 a share. Analysts surveyed by FactSet were expecting a loss of $5.68 a share 

Revenue fell 67% to $760 million, against analysts' estimate of $719 million. 

Chief Executive Joe Ferraro said Avis Budget overcame a challenging Covid-hammered quarter by '[shrinking] our fleet to match demand." 

In the quarter the company cut over $1 billion in expenses across its business, reducing costs 47% from a year earlier. 

 Avis achieved the cost cuts by reducing its fleet by more than 100,000 vehicles and canceling over 185,000 incoming vehicle orders around the world in the quarter. 

The company's car fleet in June was 26% lighter than it was a year ago. 

Avis also reduced its workforce in the quarter, offering separation packages and furloughing about 60% of its pre-pandemic global headcount. 

The company also reduced compensation for its senior leadership amid the pandemic. 

At last check Avis Budget shares traded up 2.9% at $28.40; they've traded on Wednesday up as much as 11%. 

The shares were off 14% in 2020 through Tuesday's close. And they are trading at more than four times their 52-week low of $6.35 set in mid-March.