(Forbes) Late last night, Hertz (NYSE: HTZ) filed for bankruptcy. The restructuring has sent shockwaves through the US auto industry, according to CNN. What’s driving the decision? Reduced air travel. The TSA reports that domestic flights are down 94%. As a result of this massive shrinkage, car rental rivals Avis Budget Group (NASDAQ: CAR) and privately-owned Enterprise are also hurting. Now, major auto manufacturers like Ford (NYSE:F), GM (NYSE: GM) and Fiat Chrysler (NYSE: FCAU) are seeing a vast aspect of their annual sales threatened. Last year, Hertz bought 1.7 million US automobiles - or about 10% of the US auto industry production. What are the implications for Detroit - and the US economy as a whole - as the coronavirus finds more corporate victims?
At the start of the year, Hertz had 568,000 vehicles parked at 12,400 locations across the globe. The company’s overall revenues in 2019? $9.8 Billion. But carrying cars on a balance sheet is a pricey proposition: in March of this year the company was servicing nearly $19 billion in debt- with only (only?) $1 billion in cash available, according to CNN reports. But the bankruptcy filing has broader implications than just Hertz’s balance sheet.