Hertz Global Holdings Inc. filed for bankruptcy May 22nd in Delaware after negotiation talks with lenders as well as talks with the U. S. Treasury Department fell through.
The Chapter 11 filing allows the company to keep operating while it devises a plan to pay its creditors and turn around the business after the impacts of the coronavirus pandemic ravished the travel industry.
“The impact of Covid-19 on travel demand was sudden and dramatic, causing an abrupt decline in the company’s revenue and future bookings,” said the company in a statement. “Uncertainty remains as to when revenue will return and when the used-car market will fully re-open for sales, which necessitated today’s action.”
According to SEC filings, Hertz laid off 10,000 workers April 14th in an effort to take “proactive and aggressive actions to manage costs and reduce capital expenditures” in combating the financial impact of COVID-19. The Wall Street Journal reported that Hertz had failed to make lease payments late last month in an effort to “preserve cash” and was actively negotiating with senior lenders in hopes to reduce vehicle payments.
According to the Wall Street Journal, Hertz has nearly $19 billion in debt, including $4.3 billion in corporate bonds as well as $14.4 billion in debt backed by their fleet of vehicles.
All travel-related companies have been hurt by the pandemic, with Enterprise laying of over 2,300 workers in rolling layoffs since March.
The airline industry is also feeling the impacts with Boeing Co. CEO telling Today Show’s host, Savannah Guthrie that he believes passenger traffic levels will not return to 100% by the fall.
“Airline traffic levels won’t be back to even 25% in September, and “maybe” only approach 50% by the end of the year, with a return to pre-COVID-19-pandemic levels not likely for three to five years.”