Reports: Estero-based Hertz could face bankruptcy
Hertz, one of Southwest Florida’s larger employers, saw its stock price fall nearly a dollar Thursday to finish at $4.93 a share.
A year ago, Hertz sold for nearly $21 a share.
The New York Post and others warned on Thursday that the Estero-based rental car giant could be on the verge of bankruptcy if the federal government doesn’t come through with a bailout.
Some experts believe 80 percent of Hertz’s fleet of 500,000 cars are parked in lots all over the world. No one’s traveling, no one’s renting cars, and there’s no real end in sight – short term.
Long term, there is hope.
“The automobile is not generating revenue. But at the same time, it’s costly to hold them and it’s costly to put them in a lot somewhere,” said John Silvia, founder of Dynamic Economic Strategy.
Struggling before the pandemic hit, Hertz is now on life support. A company insider told the New York Post that the company is on the verge of bankruptcy.
Management has already asked the Trump administration to include the company in its plans to rescue the travel industry.
“They have a lot of expenses, they have a lot of revenues, and so obviously the expected future value of the company goes down, i.e. the stock price goes down,” Silvia said.
The former chief economist for Wells Fargo said not all is lost. Silvia predicts Hertz will get some sort of government bailout because rental cars are essential to the economy.
“I think if they can get the loans and the loan guarantees, then they’ll probably scrape by because I suspect that a lot of this business will come back.”
But if Hertz is forced into bankruptcy, Silvia believes the company would reorganize, not go out of business.
“We would call it, you know, Hertz 2,” he said.
In the short term, Hertz has already started to lay off some of its 38,000 employees worldwide.
Hertz employs 1,100 people in Southwest Florida, so if the company were to fail, that would be devastating.
Sen. Rick Scott was instrumental in bringing Hertz to Estero when he was governor. As senator, he’s now in the position to pressure the president to help the company.
Scott has yet to respond to requests for comment.