"It's a very fluid situation right now," said Avis Budget Group CEO and president Joe Ferraro in its 2021 Q1 earnings call today in regard to the uncertainty around the potential car rental vehicle shortage. "I can guarantee you we are doing everything in our power to ensure we have available fleet to meet the current and future demand."
At the moment, Avis Budget has not run into issues with vehicle deliveries from car manufacturers. "We're getting in new cars daily and we've seen our current expectant schedule being satisfied," Ferraro said.
To ensure vehicle availability, the car rental company is using its older vehicles as efficiently as possible and investing in maintenance.
"One of the silver linings of this pandemic is that our vehicles just didn't have as many miles put on them, allowing us the flexibility to hold them slightly more," he said. "We have been investing more proactively in better maintenance to make sure we get the most out of our vehicles," he said. Avis Budget's connected vehicles are also "paying dividends" by alerting staff to maintenance issues in real time.
In the first quarter, leisure demand was "very strong" and will continue to be in the summer, according to Ferraro. The corporate segment continues to improve and length of rental remains high.
"Commercial business [corporate] has sequentially improved month over month as more people get back to their offices and start traveling a bit," said Ferraro. "The length of rental that we have on commercial businesses is seemingly still pretty high, so that's been a positive."
Corporate demand likely won't accelerate until after the summer, according Ferraro. "It's pretty much predicated on... [when] commercial clients get back to their offices and then how did they feel about traveling back in," he said. "We do our own internal polling of the accounts that we do business with, and they are all kind of in that range of 'After the summer, we get people back into the city office buildings and we get people thinking about travel maybe in the latter part of the year.' So there's probably some anticipation."
In the first quarter, Avis Budget Group saw its revenue drop 22% year over year. Net loss amounted to $170 million. Avis Budget achieved adjusted EBITDA of $47 million, the car rental company's best since 2015 and third consecutive quarter of positive adjusted EBITDA since the start of the pandemic. Avis Budget attributed the achievement to cost discipline and a double-digit growth of 12% in revenue per day in the Americas.
Source: Business Travel News