A day after Hertz served termination notices to more than 150 drivers who shuttle cars from remote parking lots to be made available for customers, posted dismal third quarter earnings. Florida-based Hertz Global Holdings, the parent company of Thrifty Car Rental, Dollar Rent A Car and other Hertz car rental franchises missed earnings per share significantly. They posted readjusted earnings of $1.50 per share against analyst estimates of $2.73 per share. The company's revenue also fell 1.3% to $2.54 billion and total expenses rose 5% to $2.43 billion. Analysts had originally estimated revenue of $2.59 billion according to Thomson Reuters I/B/E/S. CEO John Tague said in a press release that the company is still aiming to cut costs in the long run. "A customary vehicle depreciation rate review near the close of the third quarter resulted in a substantial depreciation adjustment, particularly on compact and mid-sized vehicles, that together with rental volume at the low end of our expectations as well as higher net operating and administrative expenses impacted our performance."
Following the news, the stock lost almost half of its value, falling 49% to $18.19 a share. In addition to the equipment-rental separation, which gave it a much needed cash infusion to pay down debt, Hertz has been aggressively cutting expenses - targeting $350 million in cost-cuts for the year. Hertz ended the quarter with $1.43 billion in cash and $14.86 billion in debt. US rental revenue fell 2% as a result of 1% decline in volume and 3% in daily rates. Now drivers are staging a work strike at San Francisco International Airport (SFO). They allege unfair treatment from their corporate employer. The company is unwillingly to reconsider postponing the layoffs for 90 days through the holiday season, workers from joined representatives from a local labor union to make their presence felt.
Workers who have worked for Hertz for almost 20 years have expressed their concerns were compounded since workers have struggled for years to receive compensation for sick days or holidays as well. Hertz in a prepared statement said 90 percent of those losing their jobs were offered new positions with EDS Service Solutions, the company brought in to manage the shuttle service. While the workers have claimed Hertz refused to respond to comments or meet with the workers, Hertz claims it has repeatedly worked diligently to negotiate a contract with the union only to have those terms rejected by the workers. November has just started and it does not look like it will be a good one for Hertz.