The car renter american Hertz, more than a century and known throughout the world, was placed Friday under the u.s. system of bankruptcy, decimated by the pandemic Covid-19.
For the time being, this procedure only relates to its operations in the United States and Canada, said the iconic band in a press release.
It savings and its major operational regions including Europe, Australia and New Zealand.
“The impact of the Covid-19 on the travel demand has been sudden and dramatic, resulting in a sharp drop in the company’s revenues and future bookings,” explained the group.
Hertz indicated that it took “immediate action” giving priority to the health and safety of employees as well as customers. It has also eliminated “all non-essential spending”.
“However, uncertainty remains with regard to the return of income and the reopening of the complete market (…) which need action today,” he adds.
On 21 April, Hertz had already announced cutting 10 000 jobs in North America, or 26.3% of its global workforce, to save costs in the face of the uncertainties caused by the efforts to contain the pandemic.
On Friday, the group said ” we are even 20 000 people in total were fired, about half of its global workforce.
In the United States, the use of chapter 11 is a device that allows a business no longer repay its debt restructuring by creditors.
Hertz has not mentioned the amount of his debt, but the Wall Street Journal reported Friday of a debt of approximately $ 19 billion and nearly 700 000 vehicles largely unused due to the coronavirus.
“The financial reorganization will provide Hertz a route towards a financial structure more robust, which will position the best society in the future,” said Hertz.
“Hertz has more than a century of leadership in the industry and we have entered into 2020, with a high dynamics of revenues and profits,” said Paul Stone, the group’s CEO quoted in the press release.
But the pandemic has put a stop to the activity and direction of the group feared that the recovery is slow to materialize.
Emblematic of the crisis
In addition, the question remains on the group’s ability to recover its customer business while the pandemic was widespread telework.
According to the boss, the use of chapter 11 will protect the “value” of the assets of the group and “give the time necessary for the group to put in place a new financial base stronger to get through this pandemic and to position ourselves better”.
The company is based in Estero, Florida, employed 38,000 people at the end of December, of which 29 000 in the United States.
Since a few years, Hertz was certainly struggling with the competition, including Avis Budget, and the services of rideshare, such as Uber.
The company had thus suffered a fourth loss in net annual in a row in 2019. But 2020 had started well with a turnover increase of 6% in January and 8% in February compared to the same month of the previous year.
This failure illustrates the magnitude of the crisis that the United States is currently experiencing, as a result of the paralysis of entire sectors of the economy including transportation and tourism, in an effort to contain the spread of the virus.
In total, since the sudden stop of the economy in mid-march, 38.6 million people have sought unemployment benefits in the United States.
The president of the u.s. central Bank Jerome Powell spoke of a recent pic probable unemployment at 20% or 25%, after climbed 14.7% in April.
The GDP could decrease by 20% or even 30% in the second quarter, after having declined by 4.8% in the first three months of the year.
More than 1.6 million people have been infected by the coronavirus in the United States, and the pandemic has caused nearly 96,000 deaths, according to the latest data from Johns Hopkins that reference.