Hertz is the latest major company to implode after the pandemic nearly halted all business and leisure travel worldwide.
"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 in a statement when it revealed its bankruptcy filing Friday night. “Hertz took immediate actions to prioritize the health and safety of employees and customers, eliminate all non-essential spending and preserve liquidity. However, uncertainty remains as to when revenue will return and when the used-car market will fully re-open for sales, which necessitated today's action.”
The rental car company, which is the second largest in the country after Enterprise Holdings by sales, locations, and fleet size, joins other huge companies in filing for financial protection. Since the beginning of the year, the list includes JCPenney, Neiman Marcus, J. Crew, Pier 1, Papyrus, Modell’s Sporting Goods, True Religion, Art Van Furniture and FoodFirst Global Restaurants, the parent company of the Brio Italian Mediterranean and Bravo Fresh Italian restaurant chains.
Just prior to the pandemic hitting the U.S., Hertz launched a campaign Jan. 23. The "Extra Mile" campaign included TV, digital and social media celebrating the inspirational people who go the extra mile for their families, friends and communities, like the dedicated soccer moms and dads who shuttle teams to the game, to those who give their time to help friends move.
Hertz says the bankruptcy process will give it "a more robust financial structure that best positions the company for the future as it navigates what could be a prolonged travel and overall global economic recovery.”
The company rents cars under the brands Hertz, Dollar, Thrifty and Firefly, a discount brand outside the United States. The company had a total of 568,000 vehicles and 12,400 corporate and franchise locations worldwide at the start of this year. About a third of those locations are at airports.
Although the filing will offer some financial relief, Hertz’s troubles are far from over. Airport rental accounts for a huge part of its business, and the TSA continues to report huge decreases in activity.
Memorial Day weekend travel kicked off May 21 when 318,449 people came through TSA checkpoints nationwide, about 90,000 more than the previous day. Exactly one year earlier, 2,673,635 people were screened at security checkpoints nationwide.
The travel industry across the board continues to take hits in consumer confidence. Only 35% of consumers said they trust rental car companies to take the necessary steps to ensure their health and safety in a post-COVID world. Rental cars were the second from the bottom in the travel category, per a report from research consultancy Magid.
The only travel-related segment less trusted at the moment is the cruise industry, trusted by only 32% of consumers. One in five survey respondents do not plan to return to their normal routines after the coronavirus crisis has passed.