US's Second-Largest Car Rental Company 'Hertz' Files for Bankruptcy Protection Due to COVID-19

[Image source=AP Yonhap News]

[Asia Economy Reporter Seungjin Lee] Hertz, the second largest car rental company in the United States with a history of over 100 years, could not withstand the impact of the novel coronavirus disease (COVID-19).

According to the Associated Press on the 22nd (local time), Hertz, a car rental company headquartered in Florida, filed for bankruptcy protection at the Delaware bankruptcy court on the same day.

If the court decides that it is better for the company to continue rather than liquidate, it will accept the bankruptcy protection application and begin court supervision. Debt repayment will be temporarily postponed, and the company will enter rehabilitation proceedings. However, Hertz's overseas branches in Europe, Australia, and New Zealand are not subject to the bankruptcy protection application.

Hertz filed for bankruptcy protection after failing to extend the repayment deadline for car lease payments, which was due on that day. As of the end of March, Hertz had available cash of $1 billion (approximately 1.2405 trillion KRW), but its debt amounted to $18.7 billion (approximately 23.1973 trillion KRW).

A significant portion of Hertz's revenue comes from vehicle rentals at airports, but with the lockdown measures issued in March due to COVID-19 and travel bans, all income was cut off.

Despite restructuring efforts such as laying off 12,000 employees, placing 4,000 on unpaid leave, cutting vehicle purchase costs by 90%, and stopping unnecessary expenses to save $2.5 billion annually (approximately 3.1 trillion KRW), Hertz could not withstand the impact of COVID-19.

As of the end of 2019, Hertz employed about 38,000 people worldwide and is one of the companies most severely affected by COVID-19.

Hertz had already been unable to make payments since last month, so the bankruptcy protection filing is considered a "foreseen event."

U.S. investment bank Jefferies forecasted last month that "Hertz's competitor Avis will survive the COVID-19 crisis, but Hertz has a 50-50 chance."

This content was produced with the assistance of AI translation services.