Avis Budget Group posts record Q4 revenue but notes a 'dearth' of business travel in early 2022

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Avis Budget fourth-quarter 2021 revenue was up 90% year over year to $2.6 billion, representing a 19% gain from the same period in 2019.
Avis Budget fourth-quarter 2021 revenue was up 90% year over year to $2.6 billion, representing a 19% gain from the same period in 2019. Photo Credit: IJzendoorn/Shutterstock.com

Despite a negative turn in demand because of the Covid-19 omicron variant from late November into January, Avis Budget Group posted its best fourth quarter in terms of revenue, company executives said during a Tuesday earnings call.

"In August we reported our best-ever second quarter revenue, adjusted EBIDTA and margin in our company's 75-year history," Avis Budget CEO Joe Ferraro said during the call. "In November, we reported our best-ever third quarter, along those same metrics. Today, we report the best-ever fourth quarter and full fiscal year in our company's history."

Nevertheless, there was a "dearth" of corporate travel throughout January and the beginning of February, Ferraro said, so midweek utilization has been "challenged." He added that January normally is a heavy month for corporate demand, but with "many companies reintroducing work-from-home policies for the start of this year, we recognized declines in rental days similar to the seasonal declines from December of 2019 to January of 2020."

Still, Avis Budget CFO Brian Choi said that the company had more corporate business in the fourth quarter than in the previous quarters of 2021. There also has been increasing demand from small and midsize businesses, Ferraro added, which typically book at higher rates than companies with corporate contracts.

When asked about the projected mix of leisure and corporate volume, Ferrero demurred, noting that "because we have the month of March yet to come, and March tends to be, in a normalized year, highly commercial. I don't see that as being as evident this March as it was in March of 2019."

Ferrero did suggest, however, that corporate business in 2022 would start to return more rapidly than it did in the early parts of 2021. "There is probably going to be some pent-up demand as people get back to the office and they want to get together, and they start looking at the revenue and top-line earnings to see if there's a need to go on more sales calls," he said.

Avis Budget fourth-quarter 2021 revenue was up 90% year over year to $2.6 billion, representing a 19% gain from the same period in 2019. Net income for the quarter was $381 million compared with $142 million in Q4 2019, and adjusted EBITDA was $683 million versus $143 million two years ago.

Full-year revenue increased 72% year over year and 2% from 2019 to $9.3 billion. 2021 net income was $1.3 billion compared with $302 million in 2019, and adjusted EBITDA was $2.4 billion, up from $788 million in 2019.

In the Americas, fourth-quarter adjusted EBITDA was $670 million and $2.4 billion for the year, driven by strong pricing, increased demand and sustained cost discipline, according to the company. These numbers compared with $144 million in the fourth quarter of 2019 and $652 million for the full year. For international, fourth-quarter adjusted EBITDA was $32 million and $118 million for the year, compared with $16 million for Q4 2019 and $203 million for the year.

Source: Business Travel News

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