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Car rental company Avis Budget Group raised its full-year revenue and profit forecast, citing higher car rental volumes and rates in North America, and reported a higher-than-expected quarterly profit.
Avis, which gets more than two-thirds of its revenue from rentals at airports, said it now expects 2014 revenue of $8.4 billion-$8.6 billion, up from its previous forcast of $8.3 billoin-$8.5 billion.
The company also raised its adjusted earnings forecast to $2.50-$2.95 per share from $2.45-$2.85.
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 U.S. 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, data from the International Air Transport Association showed. (http://r.reuters.com/huh29v)
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 U.S. car rental companies to report quarterly results. Larger rival Hertz Global Holdings Inc said on Tuesday it was delaying reporting its quarterly results.
Avis posted a net income of $4 million, or 3 cents per share, in the first quarter ended March 31, compared with a loss of $46 million, or 43 cents per share, a year earlier.
Excluding items, Avis earned 16 cents per share.
Revenue at the car hire firm, which gets more than two-thirds of its revenue from rentals at airports, jumped 10 percent to $1.86 billion.
Analysts on average were expecting a profit of 8 cents per share on revenue $1.83 billion, according to Thomson Reuters I/B/E/S.
The company’s shares were up 2 percent at $55 in extended trading. They have gained about 72 percent in the past year, compared with a 23 percent rise in the Dow Jones U.S. Leisure & Travel index.
Reporting by Ankit Ajmera in Bangalore; Editing by Rodney Joyce and Joyjeet Das.
Copyright (2014) Thomson Reuters. Click for restrictions.