Transportation companies face a myriad of challenges – from overcoming economic headwinds and rising interest rates to keeping warehouses organized and embracing digital technologies. These challenges have created a pressure-cooker situation, driving companies like Yellow Corporation and Hertz Global Holdings to file for bankruptcy. In this report, we look at major U.S. transportation companies to see which ones are performing well financially, which ones may be showing signs of financial distress and which ones have filed for bankruptcy in the past. Our goal is to offer useful insights into what transportation companies can do to improve their financial health and avoid filing for bankruptcy.
Avis Budget Group struggles with increasing long-term debt and erratic payment behaviors.
Avis Budget Group’s long-term debt has consistently increased for the last three years. While this alone wouldn’t be reason enough to classify Avis as a high risk, Creditsafe data reveals that the company’s DBT spiked drastically from 8 in March to 31 in April and remained high until September.
Spirit Airlines has been mired in mounting debt and liquidity problems.
Earlier this year, Spirit Airlines said it was looking to refinance its debt and hopes to refinance $1.1 billion of debt due in 2025. To make matters worse, the airline doesn’t have a stable track record of paying bills on time. As Creditsafe data reveals, late payments increased over several months in 2023. For example, the number of late payments (1-30 days) rose from 7.00% in September 2023 to 30.87% in October 2023. A similar pattern occurred soon after when the number of late payments (1-30 days) rose from 6.37% in November 2023 to 30.54% in December 2023 and then again to 51.08% in January 2024.
Since exiting bankruptcy in 2020, Hertz Global Holdings has improved liquidity and slashed costs.
The company’s new investor group, led by Knighthead Capital Management and Certares Opportunities, injected $5.9 billion in new equity capital, which contributed to an 80% reduction in corporate debt. While its liquidity and cost cutting measures are positive signs, it’s somewhat concerning that the number of delinquent payments (91+ days) increased consistently during the second half of 2023. For instance, the number of delinquent payments (91+ days) rose from 4.64% in August to 6.90% in September, then rose again to 10.73% in October.
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