PARSIPPANY, NJ -- 12/04/08 --
Avis Budget Group (NYSE: CAR) today provided
details of the progress the Company has achieved to date from the cost
reduction initiatives announced on November 6.
"Since unveiling our five-point plan, we have taken immediate action and
remain on track to lower our cost base by approximately $150-$200 million
annually by the middle of 2009, which is in addition to the $50 million in
annual savings initiated in the third quarter," said Avis Budget Group
Chairman and Chief Executive Officer Ronald L. Nelson. "While these are
difficult steps to take, we are committed to ensuring that we adjust our
business in response to the economic conditions in which we are currently
operating."
Actions taken over the past weeks against the five-point plan include:
-- Cost reductions: The Company has frozen management salaries, adjusted
the size and composition of its planned fleet and eliminated more than
2,200 positions across all areas of its business. The Company first
offered most employees the option to volunteer for employment termination
in return for an enhanced severance package. With the number of volunteers
falling short of the staff reductions necessary, the Company has effected
the required number of involuntary staff reductions.
-- Station, segment and customer profitability: The Company has taken
steps to revise or terminate certain unprofitable customer relationships,
and to close underperforming off-airport locations.
-- Price increase: The Company recently announced an increase in retail
car rental rates of $3.00 per day and $20.00 per week, effective December
1, 2008, applicable to all airport and selected off-airport rentals in the
U.S. other than those covered by corporate account agreements or other
special arrangements.
-- Purchasing: The Company has begun the process of consolidating
procurement by appointing a corporate head of purchasing and has identified
most of the addressable spend which it will focus on in 2009.
-- Back-office consolidation: The Company will close its claims
processing facility in Orlando, Fla., with claims processing to be
consolidated within other Company offices or outsourced. In addition, the
Company's Wichita Falls, Texas, contact center will be closed, with
customer calls to be handled by third-party service providers or by the
Company's Tulsa, Okla. and Fredericton, New Brunswick contact centers.
"We are pleased with our progress to date, which when combined with the
steps taken in the third quarter, will allow us to enter the new year with
more than $150 million of incremental cost reduction flowing through our
income statement. Nevertheless, it is our intention to continue our
relentless focus on cost containment even if and when economic conditions
improve, so that we can achieve our ultimate goal of restoring our margins
to previous levels," said Mr. Nelson.
The Company also noted that, along with other vehicle rental industry
competitors, it is encouraging the federal government to take steps to
bolster liquidity in those financing markets that support the purchase of
vehicles, both by the rental industry and other fleet purchasers as well as
by dealers.
"We are urging Washington to help stabilize the automotive industry. The
current situation puts the livelihood of millions of Americans at risk and
directly impacts the car rental industry, which purchases approximately $30
billion of vehicles each year, or about 15 percent of total U.S.
production," Mr. Nelson said. "We also believe that additional government
action is necessary to restore access to capital and liquidity and thereby
enable the car rental industry to weather this difficult economic period
without necessitating fleet reductions that could impact the industry's
ability to meet the demand for rental vehicles. This would also help to
minimize the potential need for the Company to pursue additional staff
reductions."
About Avis Budget Group, Inc.
Avis Budget Group (NYSE: CAR) is a leading provider of vehicle rental
services, with operations in more than 70 countries. Through its Avis and
Budget brands, the Company is the largest general-use vehicle rental
company in each of North America, Australia, New Zealand and certain other
regions based on published airport statistics. Avis Budget Group is
headquartered in Parsippany, N.J. and has more than 28,000 employees. For
more information about Avis Budget Group, visit www.avisbudgetgroup.com.
Forward-Looking Statements
Certain statements in this press release constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different from
any future results, performance or achievements expressed or implied by
such forward-looking statements. Statements preceded by, followed by or
that otherwise include the words "believes", "expects", "anticipates",
"intends", "projects", "estimates", "plans", "may increase", "may
fluctuate" and similar expressions or future or conditional verbs such as
"will", "should", "would", "may" and "could" are generally forward-looking
in nature and not historical facts. All information in this release
related to cost savings and cost reductions are forward-looking statements.
Various risks that could cause future results to differ from those
expressed by the forward-looking statements included in this press release
include, but are not limited to, the downturn in the U.S. economy, the high
level of competition in the vehicle rental industry, greater than expected
cost increases for new vehicles, disposition of vehicles not covered by
manufacturer repurchase programs in the used vehicle marketplace, the
financial condition of the auto manufacturers that supply our rental
vehicles which could impact their ability to perform their obligations
under our repurchase and/or guaranteed depreciation arrangements, a
downturn in airline passenger traffic, an occurrence or threat of
terrorism, our requirement for substantial capital, a disruption in our
ability to obtain financing for our
operations, our ability to meet the financial covenants contained in our
senior credit facilities, any additional significant increase in interest
rates or borrowing costs, fluctuations related to the mark-to-market of
derivatives which hedge our exposure to interest rates and fuel costs, the
Company's ability to execute on its cost and efficiency plans and
strategies, and the Company's ability to accurately estimate its future
results and implement its strategy for growth. Other unknown or
unpredictable factors also could have material adverse effects on Avis
Budget Group's performance or achievements. In light of these risks,
uncertainties, assumptions and factors, the forward-looking events
discussed in this press release may not occur. You are cautioned not to
place undue reliance on these forward-looking statements, which speak only
as of the date stated, or if no date is stated, as of the date of this
press release. Important assumptions and other important factors that could
cause actual results to differ materially from those in the forward-looking
statements are specified in Avis Budget Group's Annual Report on Form 10-K
for the year ended December 31, 2007 and Quarterly Report on Form 10-Q for
the quarter ended September 30, 2008 and in future filings with the SEC,
including under headings such as "Forward-Looking Statements", "Risk
Factors" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations". Except for the Company's ongoing obligations to
disclose material information under the federal securities laws, the
Company undertakes no obligation to release publicly any revisions to any
forward-looking statements, to report events or to report the occurrence of
unanticipated events unless required by law.
