Avis' cost cutting nets positive results; profitability looms closer

By Lisa Kerner

Charlotte, N.C., Sept. 30 - Avis Budget Group, Inc.'s five-point plan to cut costs adopted by the company last year is paying off, according to chief financial officer David B. Wyshner's presentation at Deutsche Bank 17th Annual Leveraged Finance Conference in Scottsdale, Ariz., on Wednesday.

Cost-cutting measures, including staff reductions and closing of some facilities, helped boost the total cost savings to $100 million, said Wyshner.

According to Wyshner, the savings are offsetting the headwinds Avis experienced due to lower revenue, higher per-unit fleet costs and higher interest rates.

"These cost reductions have targeted fixed and semi-fixed costs," said Wyshner.

"Elimination of these costs should benefit operating margins when travel volumes begin to rebound," Wyshner said.

Avis refinanced "virtually all" of its 2010 term debt maturity, according to Wyshner.

The company has $3.5 billion in funding capacity maturing, however Wyshner believes Avis can reduce the capacity it needs by $200 million or so.

"We'll be turning the corner to positive year over year comparison in profitability a quarter earlier than we anticipated and we'll be doing so despite weaker travel volumes than almost anyone expected and we'll be do so because of our cost savings initiatives," said Wyshner.

Avis is a Parsippany, N.J., provider of vehicle rental services.

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