Advantage Rent A Car seeks bankruptcy protection
Express News December 2008
Advantage Rent A Car has filed for bankruptcy protection and has laid off about half of the staff at its San Antonio headquarters as part of a larger downsizing brought on by the nation’s ongoing economic crisis.
The company filed a petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in Minnesota earlier this week at the same time it announced a new round of consolidations that would cost about 440. Advantage employees their jobs. It also will close 21 Advantage rental locations once the vehicles currently under lease to customers are returned.
Included in those closings will be the outlet at San Antonio International Airport, the only retail facility in the city. Jon Austin, an Advantage spokesman, said about 70 of the 140 employees at Advantage’s headquarters also have lost their jobs as the company has sliced its payroll to 460 people.
“We have been hit with a simultaneous drop in leisure travel, with greatly increased costs and frozen credit markets,” Austin said in a news release. “These factors are affecting many industries and companies, and we are not immune from these forces. These painful steps are a recognition of that reality.”
Ten Advantage locations in six states will remain open after the consolidation. The locations, which include one in Austin, one in Houston and two in El Paso, are considered the company’s highest-volume and most profitable locations.
Advantage was founded by Kenneth and Helen Walker of San Antonio more than 40 years ago, first operating as Three Ninety-Nine Car Rentals and changing its name to Advantage in 1985. It was purchased by ARC Venture Holdings Inc., owned by Minnesota auto entrepreneur Dennis E. Hecker, in 2006.
At its peak, the company included 140 locations, 1,500 employees and 24,000 rental vehicles spread across 12 states, the company’s bankruptcy filing said. After its second consolidation this year, it will employ 460 people and handle about 6,600 vehicles.
The bankruptcy filing, which included ARC and several other car leasing companies in the Advantage family as debtors, said economic conditions drastically reduced the number of air travelers and significantly cut revenues of the debtor companies.
The Advantage companies claimed losses of about $23.4 million for the first nine month of 2008, $19 million of that coming in October and November alone, the petition said.
Even after Hecker made a cash investment of $15 million into the company this year, it has been unable to pay its suppliers on time and could not fund its lease obligations with the companies that provide most of Advantage’s rental cars this fall, according to court documents.
Michael Kane, president of VRCG Inc., an automotive sales and rental consultant, said Advantage was pummeled not just by the nation’s economic meltdown. Several of Hecker’s other dealerships lost their lines of credit from Chrysler, creating additional problems for Advantage, Kane said.
Advantage said it will pursue alternatives to strengthen the company. It also plans to continue operating.
Advantage said it was in negotiations with a possible buyer of stock or assets at the time of the bankruptcy filing. If the sale does not occur, the company plans to reorganize its remaining operations and anticipates growing revenues, bankruptcy documents said.
Neil Abrams, with Abrams Consulting Group, said it has about a 50-50 chance of survival.
“They’ll try to keep the brand alive. It has value,” Abrams said.