Avis Budget Posts Record $1B+ Earnings

Avis Budget Group
has reported adjusted EBITDA of $1.06 billion, the highest figure in the company’s
75-year history. CEO Joe Ferraro said that the company had set the figure as a
target in 2014 but that the headwinds of Covid had delayed its achievement.

Revenues for the
third quarter reached $3.0 billion, double the figure for 2020 and 9 percent
above 2019. 

Ferraro said, “We
are seeing the benefits of initiatives we began during the early days of the
pandemic and look to build on this positive momentum as the travel environment
continues to normalize.”

In the third
quarter, the Americas accounted for earnings of $952 million against $128
million from international markets. The figures were bolstered by strong
pricing, with average revenue per day up by 44 percent in the U.S. and 25 percent
internationally, excluding exchange rate differences. The rise in rates has
been driven in part by the shortage of semiconductors for new vehicles.

In the
group’s Q3 earnings call, Ferraro said that the expansion of contactless
rentals, particularly end-to-end bookings with Avis QuickPass, had been welcomed
by customers during the pandemic.

He said there
had been “sequential growth coming back” in the corporate sector but it was
“not back to 2019 levels.” The group makes 40 percent of its revenues from
commercial rentals.

He said,
“Some of the growth has been in the small- and midmarket. They have come out a
bit quicker [than larger companies] and those have come at an enhanced rate.”

Ferraro added,
“[Corporates] are keeping cars longer which is helping the utilisation curve.
On average, the commercial customer is keeping a car 30 percent longer than in
2019.

“I fully
expect commercial business to start coming back as people go back to their
offices and people start accepting them into their locations.”

Ferraro said
the company was “particularly encouraged by news that European vaccinated travelers
will be allowed entry to the U.S.”

“Since the
announcement we have definitely seen an increase in our business patterns of
people coming to do business here in the U.S. Booking patterns are above 2019
levels and we see the same thing the airlines reported a week or so ago,” he
said.

The Future Is
Electric

Ferraro added
fuel to the dialog around electric vehicle production and the role of car
rental companies in advancing toward that future. “You’ll see us going
forward be much more active in electric scenarios as the situation develops
over time,” he said, adding that Avis wants to see more EV models
available in the market to guard against parts shortages or potential recalls.

While the CEO
was bullish on Avis Budget Group’s involvement in the future, he didn’t discuss
any current or future commitments in the space. Last week, rival Hertz
announced its commitment to purchase 100,000 Model 3 Teslas and an expanded
partnership
with Uber that would make 50,000 of those available to top-rated drivers.