New Avis Budget CEO Joseph Ferraro is wasting no time making his mark on a company feeling the twin effects of challenging demand due to the COVID-19 pandemic and the shift to ride-sharing.
Ferraro has moved quickly to fine tune two things he could control since taking over the top spot officially in June: taking car cleaning to the next level to ease consumer worries and slashing costs to protect the bottom line.
“We have always cleaned our cars really well. This forced us to look at things very, very differently,” Ferraro — who has more than 40 years experience at Avis (CAR) —told Yahoo Finance’s The First Trade. “Working with a terrific group of coalition groups has allowed us to take our cleaning to a whole new level. We now have Lysol products we are using to clean out cars. We clean our cars in 15 to 17 touch points, such as the door handles, the interior, the entertainment system. We partnered with highly trained professionals that are on the front line of this COVID-19 fight out of Columbia University and other renown universities around the country to give us the understanding in how to train our people on proper use of social distancing, masks and hand washing.”
Ferraro adds he is getting ready to debut Avis Mobile Select, where you could control the pick-up and drop-off process via a smartphone. No interaction needed, which is very social distancing friendly.
Meantime, Ferraro and his team have identified $2.5 billion in annualized cost savings. The savings in large part reflect Avis’ decision in May to furlough 70% of its workforce, or 21,000 people. Avis has also clamped down on costs internally besides just slashing payroll.
“I have been in this business for a while now, and I know when these things happen you have to react,” Ferraro says of the expense cuts.
Despite Ferraro’s sure hands, Avis is days removed from a tough second quarter with airports and universities (where it operates Zipcar) being virtual ghost towns. Sales fell 67% from a year ago to $760 million. The company’s adjusted operating loss came in at $382 million versus a profit of $175 million a year ago.
Avis shares are down about 21% this year.
Ferraro says demand has begun to recover, however.
“We have seen a sequential improvement in our demand since April year-over-year, up until this past weekend as a matter of fact,” Ferraro points out.