Avis Budget predicts decline in profits

Avis Budget has predicted that its year-over-year profits will fall as air traffic continues to slow.

The rental car company Avis Budget Group Inc. reported this week that it expects both second-quarter and full-year earnings to drop below last year’s results, largely due to the rising cost of fuel and the slowdown in commercial air travel in the U.S.

In 2007 the company recorded a profit for the second-quarter of $24 million (23 cents per share), and a loss for the fiscal year of $916 million ($8.88 per share), due to a $1.1 billion charge.

Analysts are anticipating a second-quarter profit of 20 cents per share this year, according to a recent Thomson Financial poll, and $1.25 per share full-year earnings.

Avis Budget is predicting that summer rental car demand may outpace the supply and actually drive up prices. However, reductions in airline capacity are expected to hurt fourth-quarter results. In 2007, the company reported on its website that approximately 81 percent of its revenue came from airport car rental sales.

Avis Budget expects that full-year pretax income will be around $140 million, excluding any one-time losses or gains.

The company is expected to release its second-quarter results on August 6.

www.avisbudgetgroup.com