Car rental companies Avis Budget Group (NASDAQ:CAR) and Hertz (NYSE:HTZ) both announced they would begin laying off workers last month in response to the growing COVID-19 pandemic. With confirmed cases of coronavirus infection approaching the 800,000 mark yesterday, Hertz, announced that it will be laying off even more workers.
Hertz's announcement came in the form of an 8-K filing with the SEC. Hertz explains that because it has "experienced increased rental cancellations and declining forward bookings" it has had to take "proactive and aggressive actions to manage costs and reduce capital expenditures."
"On April 14, 2020 Hertz committed to North American workforce reductions across all departments affecting approximately 10,000 employees." As of the end of last year, Hertz had approximately 38,000 employees worldwide, reports Reuters. Thus, yesterday's announcement amounts to layoffs of more than 26% of the company's workforce.
Terminations began for non-union employees on April 14. Unionized employees will begin being laid off today, April 21.
Although a cost-saving measure designed to keep the company solvent in an era of decreased demand, Hertz notes that these layoffs will not be without short-term cost to the company:
"Hertz expects to incur an aggregate of approximately $30 million in costs relating to these workforce reductions, including approximately $28 million in severance or termination payments and approximately $2 million in benefits costs primarily relating to healthcare. These costs will be incurred over the next 12 months with a majority to be incurred over the next three months."