Shares slump in car hire firm

Shares slump in car hire firm

Not enough business travellers have been hiring cars

Shares in car hire firm Avis Europe have tumbled by nearly 20% after the firm warned its revenue this year could be up to 10% lower than expected.

Demand for car hire from business travellers has been hit by the general economic slowdown and the build-up to the war in Iraq.

The firm also said that fierce competition was forcing prices down.

"We have limited visibility under current trading conditions, however our internal planning assumption at this stage is for a reduction in the range of 5-10% of full year revenues," said chairman Bob Reid.

By 1145 GMT, Avis Europe's shares were down 18.75p at 81.25p.

Summer hopes

Avis Europe said the tough conditions were expected to continue through the first half of the year, but there might be some recovery in the peak summer months.

It added that its European leisure business was also expected to grow through the summer.

The tough trading conditions had forced the company to keep tight control on both staff and fleet costs, Mr Reid said.

The integration of the recently acquired Budget hire car business was "progressing successfully" said Mr Reid, adding that there were plans to expand the brand "significantly" next year.