Hertz appears to be stuck in neutral when it comes to taking advantage of the increase in air passenger travel. After an upward revenue trend from July to October, Hertz’s total monthly revenues dropped from $233 million in October to $209 million in November. 

Hertz is obligated in bankruptcy to file monthly operating reports, though the reports are not audited, nor do they strictly adhere to GAAP accounting standards. 

The Transportation Security Administration (TSA) reported screening more than 1 million airline passengers over the four-day 2020 Thanksgiving travel period. While that volume ranged 35% to 45% below 2019 volumes for the same period, the 1-million passenger threshold is an indication of the gradual strengthening of travel during the coronavirus pandemic. 

On April 14, TSA screening volumes dropped to a low of 87,500, or just 4% of travel volume compared to the year prior. Since recording that low, travel volumes have risen about 40% between Labor Day and the Thanksgiving holiday. 

A researcher posting on Seeking Alpha took note, suggesting that though TSA screening numbers improved, this did not translate to more car rentals — at least for Hertz. “Investors’ focus on stronger TSA numbers as indication of car rental strength may no longer be a valid indicator of the rental market,” the report states.

“Given the continued weak operating business model, it will be interesting to see what type of Ch.11 reorganization plan (Hertz) can create that will allow for a viable company to eventually exit bankruptcy,” WYCO Researcher states in the report. 

The researcher also factored net monthly losses, taking into account reorganization charges for actual operating results. Along with the revenue decrease, Hertz is experiencing higher net losses as well. One reason was an exponential increase interest expenses, potentially caused by the most recent $1.65 billion debtor-in-possession (DIP) loan, which must be paid during the bankruptcy process.  

The report surmises that Hertz may continue to report losses even as the economy improves, yet the report notes that Hertz’s recent extension of its temporary master lease overcomes a major hurdle for Hertz in its bankruptcy proceedings. 

The report also analyzes Hertz’s spending on new vehicles, in which the expected average purchase price is less than the average price of cars purchased last summer and fall. The report surmises that the company may be shifting to compact and subcompact cars in a move away from business travelers to vacation rentals.