Stronger demand and pricing give Avis a lift in first quarter

Avis Budget Group Inc reported a record first-quarter profit on Monday, helped by a recovery in US travel demand and nearrecord used-car prices.

The rental car company reported adjusted earnings per share of $9.99, tripling analyst estimates as US rentals nearly matched the first quarter in 2019, before the Covid-19 pandemic brought travel to a halt.

Soaring used-car prices for vehicles Avis offloaded cut per-vehicle fleet costs by 90%, padding profit margins.

“Despite the impact of Omicron on the first half of the quarter, our team was able to quickly pivot to manage the significantly increasing demand during the back half of the quarter,” Joe Ferraro, Avis Budget Group’s chief executive officer, said in a statement.

“We focused on diligent fleet management and continued cost optimization to generate a new record first quarter adjusted Ebitda.”

High used-car prices for vehicles cut deprecation costs to almost nothing. A year ago, monthly depreciation totalled $208 per car, but that fell to just $20 a car in the the most recent quarter.

Revenue also beat estimates handily, rising 77% to $2..43 billion.

Demand for rental vehicles climbed above pre-pandemic levels in the US. Avis reported more than 27,000 rental days, compared to under 25,000 in the first quarter of 2019. But International travel lagged, with just 8,581 rental days compared to 12,500 three years ago.

Avis said its utilisation rate for the quarter — a measure of how much of its fleet is being rented out — was 67.4%, compared to 69.4% two years ago.