Shares of Dollar Thrifty Automotive Group Inc. plunged more than 30 percent on Tuesday as investors worried about the rental car company's debt covenants following its warning about difficult revenue trends and vehicle depreciation costs.
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The company said its third-quarter results will also be hurt by the bankruptcy of one of its tour operators. A Dollar Thrifty representative declined to provide further comment, but confirmed that the tour operator is U.K.-based XL Leisure Group PLC, which left more than 50,000 customers stranded abroad when it went into liquidation earlier this month.
Dollar Thrifty shares dropped $1.54, or 33.8 percent, to end at $3.01. The stock has lost about 90 percent of its value over the past 52 weeks, bottoming at a low of $2.31 in mid-July.
In a note to investors, Goldman Sachs analyst Christopher Agnew said the company seems likely to threaten some of its financial covenants by the end of the year. He said it appears that losses on Chrysler vehicles continue to be higher than Dollar Thrifty's management had previously estimated.
He also noted that Florida and California were two popular destinations for XL Travel and are also key markets for Dollar Thrifty.
Agnew has a "Neutral" rating on the stock.
In its statement early Tuesday, Dollar Thrifty said is seeking an amendment to the allowed leverage under its senior secured credit facility. If that fails, the company plans to use some excess liquidity to repay a portion of its term debt to maintain covenant compliance.
The Tulsa, Okla.-based company has more than 800 locations in the U.S. and Canada under the brands Dollar Rent A Car and Thrifty Car Rental.
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