Dollar Thrifty and Hertz lower full year forecasts

On Thursday, shares in major U.S. rental car companies closed lower, as both Hertz Global Holdings and Dollar Thrifty Automotive Group reported that they no not expect to meet full-year forecasts due to decreased rental demand and other problems.

After the markets closed on Wednesday, Hertz announced a decline in third quarter earnings of 89 percent and also said that it no longer expects to meet full-year earnings forecasts. The company revealed that it had begun cutting its workforce in September, and would reduce the number of employees by an additional 1,400, close 80 of its locations and cut the size of its fleets. Currently, Hertz has a workforce of 30,000 employees.

An analyst for Soleil Securities Group, Michael Millman, is maintaining a ‘buy’ rating on the stock. He said that the company feels that its debt capacity is sufficient to meet fleet needs through the middle of 2010, and also that he expects Hertz to announce a greater involvement in the car-sharing sector.

A Goldman Sachs analyst, Christopher Agnew, however, has a ‘neutral’ rating on Hertz shares, and commented that the rental car industry is over-fleeted, a situation that will continue to impact profitability.

On Wednesday, Dollar Thrifty issued a warning that it expects to post losses for both the fourth quarter and the full year, as a result of economic conditions that have continued to deteriorate and problems in the automotive and airline industries.

The company did report, however, that its third quarter profit was up by 67 percent, as lower derivatives losses offset the decline in revenue from vehicle rentals.

www.hertz.com