Hertz (NYSE:HTZ) announced March 25 that it will start providing free vehicle rentals to New York City healthcare workers through April 30. Healthcare workers can reserve a vehicle at 19 New York City-area Hertz locations so they can continue providing critical care to the community during the coronavirus pandemic.
“With New York City having the highest number of confirmed cases of COVID-19 in the country, healthcare workers are dealing with extremely challenging circumstances,” said Kathryn Marinello, Hertz President and CEO. “It’s vital that healthcare workers have safe and reliable transportation during this time, and we are eager to help. The dramatic decrease in travel means we have more vehicles to serve the most critical needs of the community. We’re starting in New York City with healthcare workers and we’ll continue to see how we can help during this crisis. It gives all of us at Hertz a sense of purpose and pride to lend our support as much as we can during this very difficult time.”
To immediately have an impact, Hertz is working with Mount Sinai Health System to make vehicles available to its employees throughout New York City, and is also supplying the Health System with free cargo van rentals to transport ventilators and other medical supplies to support the crisis.
“Mount Sinai Health System and our community of physicians, nurses, trainees, students and other health care professionals are working tirelessly to prevent and reduce the spread of COVID-19 and save lives,” said Kenneth L. Davis, MD, President and CEO of Mount Sinai Health System. “We thank Hertz and the growing number of community and business organizations who have pledged their support during this critical time.”
As the COVID-19 pandemic evolves, Hertz will continue to be of service in the community. Hertz is providing vehicles to its partner Team Rubicon, a veteran-led disaster response organization that is currently serving communities across the country by providing assistance such as delivery services for food-insecure populations, and coordination and logistics support for those in temporary quarantine through its #NeighborsHelpingNeighbors initiative.
In New York City and nearby New Rochelle, New York – both hot zones for the pandemic – Hertz is helping power Team Rubicon’s veteran-led support by donating vehicles to serve at-risk populations in need of essential healthcare. Additionally, Hertz is supporting Team Rubicon’s efforts with Feeding Westchester by giving Team Rubicon volunteers (known as Greyshirts), vehicles to transport food supplies from food banks in New Rochelle to mobile pantries to help ensure those in need receive proper nourishment.
“Those on the frontline of this crisis – healthcare workers, government agencies and relief organizations – need everyone’s support more than ever,” continued Marinello. “Hertz is proud to show our appreciation for the important work they’re doing by providing a valued resource during this difficult time.”
Coronavirus Impact Financial Update
On March 26, the company provided a business update related to the significant, adverse impact on travel demand from the coronavirus (COVID-19).
“Like the rest of the global travel sector, COVID-19’s impact on Hertz arrived swiftly, and the reversal in customer demand has been significant,” said Kathryn V. Marinello. “We are aggressively taking actions to sustain operations and preserve liquidity, while confronting the issues raised by some of the most difficult economic conditions we have experienced.”
Hertz experienced strong revenue and productivity in January and February, which followed 10 consecutive quarters of year-over-year revenue growth and nine quarters of year-over-year Adjusted Corporate EBITDA improvement. For the first two months of 2020, global revenue increased 6% on 8% higher U.S. car rental revenue. In March, cities around the world rapidly began shutting down and airline travel decreased dramatically, causing increased rental cancellations and declining forward bookings. Hertz immediately began adjusting fleet levels in response to the reduced travel demand. The Company has been leveraging its multiple used-car channels and negotiating with suppliers to defer new fleet deliveries or modify previously placed orders.
In addition, Hertz is aggressively managing costs and substantially reducing capital expenditures. It is prioritizing sales and marketing strategies to be more in line with the current economic environment, while providing flexibility to support its customers. The Company also has been consolidating local rental locations in the U.S. and Europe, offering customers nearby alternative pick up points, as necessary.
Hertz recently implemented employee furlough programs across its North American field operations and U.S. corporate locations to align staffing levels with the slowdown in demand. This was a very difficult decision and was not easily made, knowing that many good people would be affected. The Company hopes to bring back as many team members as possible once global travel rebounds.
In order to support the organization, while working to effectively manage the dynamic environment and protect the future of the business, senior leaders at Hertz are taking a significant reduction in pay and CEO Marinello is relinquishing 100% of her base salary.
In terms of financial flexibility, the Company has access to approximately $1.0 billion in liquidity with no significant corporate debt maturities due until June 2021. In February, Hertz increased its U.S. vehicle debt capacity by $750 million and does not anticipate any vehicle debt financing requirements for its global car rental business for the remainder of the year.