Unsplash/Obi Onyeador
The following is one story you’ll find in today’s edition of The Water Coolest’s free daily email newsletter. The Water Coolest is a daily business news and professional advice email newsletter geared towards bros (read: expect a hearty helping of unfiltered commentary and advice on how to suck less at work).
You can sign up now to get the latest news and commentary delivered to your inbox every weekday at 6 AM EST.
Hertz rental cars filed for bankruptcy Friday night after its revenue dried up faster than a rain drop in the Sahara thanks to travel restrictions caused by the coronavirus.
Hertz is going with a Chapter 11 filing, looking to restructure its debt but continue operating so it can pay its creditors at least some of the $18.7B it owes. Turns out 20 2019 Z06 Corvettes that no one upgraded to weren’t the key to long term success after all. The move adds Hertz to the growing sh*t list of high profile bankruptcies caused by the pandemic.
The company which had its humble beginning renting Ford’s Model-T’s survived the Great Depression, World War II, and multiple surges in oil prices but apparently has been building up a little too much (read: a literal f*ck ton) debt along the way.
Avis’ biggest competitor cut 16k (12k permanently) workers in March and scaled back its vehicle acquisitions by 90%. Despite shedding an estimated $2.5B in costs, not having revenue makes it hard to run a business. Who would have guessed?
Hertz shares dropped 7.5% on Friday.
Indicator lights
But you can’t blame it all on ‘rona boi’s drunk driving…
Hertz has been going downhill ever since it “upgraded” its fleet on the cheap. Instead of opting for SUVs and cars people actually wanted to drive, it bought sedans. Nobody likes the PT f*ckin Cruiser.
After missing a payment to the creditors who financed its new fleet in April, the bankruptcy writing was on the wall. On its earnings call earlier this month, it warned investors that management had “substantial doubt” in the company’s ability to remain a going concern. That’s certainly not the legal jargon you want to hear on a Monday morning…
FFS, Hertz has had four CEOs in the last six years and announced that current CEO Kathryn Marinello, who managed to increase revenue by 16% during 2018 and 2019, is stepping down, with operations chief Paul Stone taking his place. He would probably be more excited to captain the Titanic at this point. Never let go, Paul…
The bottom line
The one saving grace? At least Hertz doesn’t have to listen to Carl Icahn’s crazy ass anymore…
The activist investor owns 38.9% of the company’s public shares and has a penchant for throwing his weight around. It’s no surprise that Icahn’s intervention coincides with Hertz’s struggles, as he first bought in back in 2014. Thanks, Carl.
Water Coolest Talking Point(s)
💧It’s a shame, really. But I always knew Enterprise had a better corporate structure.” (Ian, The Water Coolest)
Like what you see? There’s more where that came from. Sign up now to get the latest news and commentary delivered to your inbox every weekday at 6 AM EST.