LOS ANGELES – Car rental company Avis Budget Group Inc (CAR.N) cut 700 jobs in the third-quarter and recorded a loss, before taxes, of more than $1 billion after writing down the value of certain assets, it said on Monday.
The company, which has been hit hard by slowing travel amid a weakening economy, also said 2008 revenue and profit would be "significantly lower" than previous estimates due to a drop in vehicle rentals.
"Declining travel volumes made the third quarter a more challenging operating environment than expected," Avis Chairman and Chief Executive Ronald Nelson said in a statement.
Excluding write-downs of between $1.1 billion and $1.3 billion and other unusual items, Avis said it expects third-quarter pretax income of $87 million and revenue of $1.7 billion.
Avis also recorded restructuring charges of $11 million for the work force reductions, which are expected to save $50 million a year.
Avis is working with lenders to renew an asset-backed bank conduit facility, and has extended $1.35 billion of its $1.5 principal to finance cars in its fleet.
In addition, company said the interest it pays on borrowings is expected to increase by nearly 3 percentage points due to the turmoil in credit markets.
Based on the preliminary results, Avis said it is in compliance with the financial covenants in its principal borrowing agreements as of September 30.