Avis Budget Group and Dollar Thrifty Automotive Group both improved fourth-quarter results from a year earlier, as efforts to shrink fleet sizes starting early last year helped cut operating costs and increased rental pricing.
Both companies also benefited from an improved used-car market that allowed them to get better resale prices and cut depreciation expenses.
Avis Budget slashed its average fleet by 19% in the fourth quarter, to about 234,000 vehicles. Dollar Thrifty cut its fleet by 11%, to about 96,000 vehicles.
Fleet reduction allowed the companies to offset some of the continued drop in demand with revenue-per-day increases. The companies also cut jobs and closed unprofitable locations.
As a result, Avis Budget narrowed its fourth-quarter loss by 60% from a year earlier, to $49 million. The company cut operating, vehicle depreciation and lease expenses by 16%. Revenue fell 8%, to $1.16 billion. Revenue per day for rented vehicles was up about 9%.
In a conference call with analysts, Avis Budget CEO Ronald Nelson said, "We made a conscious decision to de-fleet earlier than usual."
Nelson added that the company may have lost some leisure business because some vehicles were out of stock. "We feel reasonably confident we made a profit-maximizing trade."
For the year, Avis Budget's net loss narrowed to $47 million from a $1.12 billion loss a year earlier. In 2008, Avis Budget had a $1.26 billion impairment charge related in part to a write-down in the goodwill value of the company's U.S. car rental and truck rental divisions.
Avis Budget's 2009 revenue fell 14%, to $5.13 billion.
Meanwhile, Dollar Thrifty turned a fourth-quarter profit of $11.5 million, compared with a $72.2 million loss a year earlier -- despite revenue falling 2.8%, to $345.3 million.
Dollar Thrifty's operating costs fell 11%, while depreciation and lease charges plunged 39%. Rental pricing rose about 12%.
"We undertook rapid and dramtic changes in 2009," said Dollar Thrifty CEO Scott Thompson on a conference call with analysts. "This was clearly one of the best fourth quarters in the company's history."
Dollar Thrifty's 2009 profit was $45 million, compared with a $346.7 million loss in 2008. The company was able to cut costs quickly enough to offset sales that fell 9%, to $1.55 billion.
