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by C1sc0cat 2242 days ago
I am surprised the Avis has to goto the junk bond market - the cruise line I can sort of get
3 comments

The rental car market is strongly tied to the travel (both business and leisure) which has crashed. Why would it be surprising if a rental car company is in financial trouble?
Hertz is on the verge of bankruptcy so it only follows that the risk premium for Avis is high.

Just think - if nobody is flying, who is renting all those cars?

No one, they dont even have enough parking for them to all be idle simultaneously. The airport rental agencies near me have been renting out all the stadium parking nearby to use as overflow storage.
On the capital side, one of the biggest assets for rental companies are their fleets. The sell them as used cars. With nobody buying cars at all and the glut of unsold new cars packing lots, those fleets are being revalued at much lower prices. It’s a double whammy.
Yeah, I saw on reddit last month a possible insurance scam in which 3500 rental cars caught fire in an overflow parking lot in florida because they are all sitting around unused [0].

[0]: https://www.cnn.com/2020/04/05/us/airport-fires-cars-trnd/in...

It wasn't an insurance scam because they don't have insurance, they are going to eat the cost of all of those vehicles.
I'd assume most of their business is renting to people who've just flown somewhere, and right now hardly anyone is doing that.
Ah true - though I wonder if their balance sheet wasn't that good to start with.