Avis blames gloomy economy for slow recovery

Car rental group Avis Europe today blamed the gloomy economic climate and corporate cutbacks for putting the brakes on its recovery drive.

The group said the sluggish business travel sector was casting a cloud over a pick-up at its European and transatlantic leisure divisions.

Underlying profits in euro in the current year are expected to be “some 15% below” a year ago, in line with forecasts made six months ago.

Avis hires out cars to workers on business trips and also rents cars out to corporate customers for longer periods.

It said: “The weak economic environment and consequent business cutbacks have continued to suppress corporate and corporate related replacement activity.”

Underlying profits at the half-year stage were down 22% at €50m and Avis announced 150-175 job cuts in September.

The group has been hit hard by the impact of the September 11 terror attacks and firms cutting budgets to cope with the economic slump.

Today it said revenues on the leisure side were picking up with car hire within domestic markets “developing well”.

The group added in the “absence of an international conflict” the improvement in the leisure division should continue over the coming months.

But it said: “With current trends and economic prospects we expect corporate activity to remain constrained into the next year.”

Avis reports results for the year to December 31 in February and analysts expect pre-tax profits of around €121m.