With stock down, Hertz stocks up on former Delta executives

By Mark Gordon
| 5:00 a.m. July 16, 2024

Charlotte–Lee–Collier

Lee County company’s new CEO looks to his old company for turnaround assistance.

Rental car giant Hertz is on two different, yet somewhat converging, roads in an ongoing attempt to reverse the company’s lengthy slide.

That slide includes shares stuck under $4 and are down 62.85% over 2024 and nearly 80% since last July. The Estero-based company, which posted $9.37 billion in revenue in 2023, has had a full tank of troubles going back years, beyond the sluggish stock. The list includes: a 2020 bankruptcy; settling a series of lawsuits in 2022 for $168 million where hundreds of customers alleged the company reported vehicles stolen while the drivers were in good standing; and a highly publicized move earlier this year to reverse course on a go-big electric vehicle strategy, when it sold some 20,000 Teslas.

In the boardroom, meanwhile, the company is on CEO No. 5 in seven years in Gil West. The former COO at Delta Airlines, West was appointed CEO in March.

West is now the leader in Hertz’s improvement strategy.

On one side he’s looking to the skies: four out five recently named senior executives all have leadership experience at Delta Airlines. Another new leader, CFO Scott Haralson, held the same post at Spirit Airlines.

On the other side he’s leading the company to the bond market: In mid-June, in what Bloomberg News called an effort “to bolster its balance sheet after a misstep on its electric vehicle fleet” Hertz issued a $1 billion high-yield bond offering.

Hertz media relations officials declined to answer a set of written questions on the company’s turnaround strategy or provide an executive, including West, for an interview. A

The new executives were announced in a July 8 press release. The team includes:

Sandeep Dube was named executive vice president, chief commercial officer. Dube was most recently COO at Intuit Mailchimp. Before that, he was chief commercial officer at Activision Blizzard and held senior leadership roles at Delta Air Lines, including CEO of Delta Vacations.
Katherine Lee Martin was named executive vice president, general counsel and corporate secretary. She’s been the company's interim general counsel and assistant corporate secretary since April, after joining Hertz in May 2023. Before coming to the company, she held senior leadership positions at X Corp. and Twitter. Before Twitter, she spent more than a decade as an assistant U.S. Attorney at the U.S. Department of Justice.
Henry Kuykendall was named executive vice president, North America operations. He spent 33 years at Delta Air Lines, most recently as senior vice president of airport operations, overseeing Boston Logan International Airport, Detroit Metropolitan Airport, LaGuardia Airport and John F. Kennedy International Airport.
Greg May was named executive vice president, fleet management. He served as president and CEO at Valkyrie BTO Aviation, a commercial aircraft investment company for Blackstone. He has held leadership positions at Delta, Northwest Airlines and United Airlines and founded aircraft leasing company Q Aviation.
Mike Moore was named executive vice president, technical operations. He most recently was executive vice president for spaceline technical operations at Virgin Galactic. He has held leadership positions at Delta, where he spent a decade in operations-focused roles of increasing responsibility, and at Northwest Airlines.

West, in the release, says the new leaders “add capacity and capabilities that complement our existing leadership team's deep institutional knowledge of the rental car industry."

Class action

Securities litigation attorneys tend to follow quickly when a publicly traded company’s shares drop and stay down.

Estero-based Hertz Global Holdings, with shares down 79.59% in the past year, is no exception. Multiple law firms have sent public notices of intent to file class action lawsuits against the company on behalf of investors. One firm, New York-based Levi & Korsinsky, in an emailed statement, says the lawsuit “seeks to recover losses on behalf of Hertz investors who were adversely affected by alleged securities fraud between April 27, 2023 and April 24, 2024.”

The firm alleges Hertz “made false statements and/or concealed” multiple issues, including:

Downplayed the financial impact of vehicle depreciation, and/or overstated its ability to track and manage vehicle depreciation.
Demand for Hertz’s EVs was not as strong as Hertz had led investors to believe.
Hertz had too many vehicles, particularly EVs, in its fleet to remain profitable.
Hertz, “as a result of all the foregoing,” was likely to incur significant losses on the disposition of both its (non-EVs) and EVs.

"All the foregoing was likely to, and did, have a significant negative impact on Hertz’s financial results,” the firm contends, “and as a result, the company’s public statements were materially false and misleading at all relevant times.”

The Portnoy Law firm in Los Angeles, the Schall Law Firm in Los Angeles, Pomerantz LLP in New York, Bernstein Liebhard LLP in New York are among the law firms that, like Levi & Korsinsky, have sent out notices seeking investors to join the class action filing. Hertz shares are traded on the Nasdaq under the symbol HTZ.

author

Mark Gordon

Mark Gordon is the managing editor of the Business Observer. He has worked for the Business Observer since 2005. He previously worked for newspapers and magazines in upstate New York, suburban Philadelphia and Jacksonville.