Please ensure Javascript is enabled for purposes of website accessibility

Hertz Misses Lease Payments, in Talks to Avoid Bankruptcy

By Lou Whiteman - Updated Apr 29, 2020 at 4:49PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company's business has been hit hard by the pandemic.

Hertz Global Holdings (HTZG.Q) missed a lease payment and is prepping for a possible bankruptcy filing, sending shares plunging 15% on Wednesday.

The COVID-19 pandemic has hit the travel industry hard, and Hertz is no exception. The company said earlier this month a dramatic decline in air travel has led to a significant increase in auto rental cancellations and a decline in forward bookings. Hertz reacted by slashing its total North American workforce by 10,000, but it appears the cuts might not be enough.

Two people enjoying driving.

Image source: Getty Images.

Hertz in a securities filing Wednesday said it is taking "aggressive actions to preserve liquidity," including not making required lease payments.

"As a result of the pandemic, Hertz ... and subsidiaries have experienced a rapid, sudden and dramatic negative impact on their businesses," the company said in the filing. "While the company has taken aggressive action to eliminate costs, the company faces significant ongoing operating expenses."

The company said it was in talks with lenders to waive forbearance agreements that could be triggered and try to avoid a bankruptcy filing.

The Wall Street Journal reports Wednesday that Hertz is in talks with senior lenders and holders of its vehicle finance subsidiary's notes to try to temporarily reduce payments. The paper called the talks "fluid."

Even if Hertz is able to buy more time, the company's outlook will likely be challenged for the foreseeable future. Airlines are projecting that travel demand will not return to pre-pandemic levels for years. Assuming auto rentals will not fully recover until air travel does, Hertz is going to have a lot less business coming in through 2020 and beyond.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Hertz Global Holdings, Inc. Stock Quote
Hertz Global Holdings, Inc.
HTZG.Q

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.