Sen. Elizabeth Warren (D-Mass.) wrote a letter to Hertz criticizing the company as they are giving shareholders up to $2 billion in stock buybacks while rental car prices increase.
“This decision, and other actions taken before and after Hertz’s bankruptcy process,” Warren said in the letter to Hertz interim CEO Mark Fields, which was obtained by CNN, “reveals that the company is happy to reward executives, company insiders, and big shareholders while stiffing consumers with record-high rental car costs and ignoring the recent history that nearly wiped out the company.”
Warren specifically questioned why the company would put money toward buybacks instead of purchasing new inventory that could improve prices and imbalances between supply and demand.
“You owe your customers and the public an explanation for this $2 billion buyback,” Warren added, “and whether it is in the best interests of the long-term health of the company and its consumers.”
In May 2020, Hertz filed for bankruptcy because of financial hardship arising from the lack of travel during the COVID-19 pandemic. The case was regarded as one of the most prominent bankruptcies of the pandemic, as 12,000 of the company’s employees in North America lost their jobs and 4,000 employees were furloughed, CNN reported.
After being acquired by a group of investment firms earlier in 2021, the rental car company successfully came back from bankruptcy in June.
In October, Hertz saw a record-setting adjusted profit and corporate margin and said that “improvements in pricing power” had offset rental car volumes that fell below 2019 levels, CNN added.
The following month, the company announced its stock buyback program, saying the plan would allow for “ongoing and profitable investment in the business,” per CNN.
The Hill has reached out to Warren and to Hertz for comment.