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After shedding $5 billion of debt, car-rental firm Hertz has a chance to make the most of its opportunities under new ownership now that it is emerging from bankruptcy protection.
Hertz filed for Chapter 11 bankruptcy protection in May 2020, and is coming out of bankruptcy Wednesday, after a several-month bidding war and auction, under a $6 billion reorganization plan funded by Knighthead, Certares and Apollo.
Plans include using data tech to help reengineer what everyone agrees is a broken car-rental experience; investing in demand sensing and yield management, as well as fleet assignment capabilities, and to fix Hertz’s underperformance in distribution channels.
Certares, the private equity firm with a heavy footprint in travel, including American Express Global Business Travel, Liberty Tripadvisor, Latam Airlines with Knighhead, and Internova Travel Group, can play a role in using data insights from these far-flung travel assets to assist Hertz in planning for shifts in demand and traveler preferences.
Hertz may be able to take advantage of Certares’ ownership stakes across the travel industry. Tripadvisor is offering subscribers to its new Tripadvisor Plus discount program certain Hertz loyalty program benefits, and American Express Global Business Travel could conceivably deepen ties with the car rental firm.
Under the reorganization, Hertz now has $2.2 billion in global liquidity, and a $2.8 billion credit facility, which should give it the ability to invest in its business and to be opportunistic about acquisitions.
Hertz owns the Hertz, Dollar, Thifty, and Firefly car rental brands.
The long-term plan envisions a transition toward electric and alternate fuel vehicles in line with changes in customer tastes.
The reorganization plan sees creditors getting paid off, and shareholders receiving more than $1 billion in value. The $5 billion in debt that is being eliminated includes Hertz’s corporate debt to its European subsidiaries.
Hertz’s website claims the reorganization puts it in an advantageous position: “It provides a robust recovery and excellent value for all of our stakeholders – including our employees and customers as well as our investors, franchisees and business partners – and enables Hertz to emerge from the Chapter 11 process as a much stronger, more competitive company.”
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