Avis Swings To Q1 Profit On Higher Revenue

May 7, 2014

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Car rental company Avis Budget raised its full-year revenue and profit forecast, citing higher car rental volumes and rates in North America, after reporting a USD$4 million quarterly profit.

Avis, which gets more than two-thirds of its revenue from rentals at airports, said it now expects 2014 revenue of USD$8.4 billion - USD$8.6 billion, up from its previous forecast of USD$8.3 billion - USD$8.5 billion.

Avis said the raised forecast reflects the purchase of a licensee in Edmonton, which gives the company a larger share of Canada's vehicle rental spend.

The car rental industry, tied closely to airline traffic and hotel bookings, is being boosted by a recovery in business and leisure travel in the United States.

Rising US consumer spending and employment growth led to higher demand for air travel in the first quarter.

North American airlines reported a 3.5 percent rise in traffic in January, a 2 percent rise in February and a 0.6 percent rise in March, according to IATA.

Avis reported a 1 percent rise in time and mileage revenue per day - a key metric that indicates pricing - in North America.

Avis is the first among US car rental companies to report quarterly results. Larger rival Hertz said on Tuesday it was delaying reporting its quarterly results.

Avis posted a net income of USD$4 million in the first quarter ended March 31, compared with a loss of USD$46 million a year earlier.

Revenue jumped 10 percent to USD$1.86 billion.