DOW JONES NEWSWIRES
Hertz Global Holdings Inc. (HTZ) on Monday raised its car-rental
rates at North American airport locations to help offset higher
vehicle depreciation costs and increased maintenance costs.
Stagnant credit markets, slumping demand for travel and the
automobile industry's hardships are hobbling rental-car companies.
Fewer travelers are renting cars, and the industry is struggling to
find buyers for used automobiles and secure financing to purchase
new ones to replace them.
As a result, Hertz, rival Avis Budget Group Inc. (CAR) and other
companies are lobbying Congress to allow them to use Troubled Asset
Relief Program funds to finance new auto purchases.
Hertz said the most recent price increases - $5 a day or $30 a
week - move the rates closer to last year's levels when the company
was trying to offset skyrocketing gas prices. The latest move
doesn't affect negotiated contract rates. Hertz said the average
rate fell 2% the past year.
Shares jumped 9% to $5.69 on the news, but they are still barely
half the level seen in September.
Last month, Hertz said it was cutting more than 4,000 jobs, or
about 13% of its global work force, as the industry deals with
slumping demand. Chairman and Chief Executive Mark P. Frissora
added that volume, pricing and residual values continued to decline
during the fourth quarter and the company couldn't predict when
markets would improve.
Standard & Poor's Investors Services has said the economic
crisis has taken a harder-than-expected toll on the car-rental
industry compared with previous downturns. Analyst Betsy Snyder has
attributed the slump to a significant reduction in airline capacity
serving the U.S. market, the current ownership structure of the
companies, the weakness of the auto makers, and the inability of
the companies to gain access to the capital markets.
-By Lauren Pollock, Dow Jones Newswires; 201-938-5964;
lauren.pollock@dowjones.com