Avis 2012 Annual Report Download - page 22

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15
Any one of these factors could result in delays, increased costs or decreases in the amount of expected revenues related to
combining the companies and could adversely affect our operations, financial results and liquidity.
In addition, we may undertake acquisitions financed in part through public offerings or private placements of debt or equity
securities, or other arrangements. Such acquisition financing would increase our indebtedness. If we issue equity securities or
equity-linked securities, the issued securities would have a dilutive effect on the interests of the holders of our common
shares.
Weakness in general economic conditions in the United States, Europe and other areas in which we operate, weakness
in travel demand and the housing market, and/or a significant increase in fuel costs can adversely impact our business.
Historically, our results of operations have declined during periods of general economic weakness, as experienced in 2008
and 2009 when our results were adversely impacted by the global economic recession. If economic conditions in the United
States, Europe and/or worldwide were to weaken, our financial condition and results of operations could be adversely
impacted in 2013 and beyond.
In 2012, we generated approximately 71% of our car rental T&M revenue from our on-airport locations; therefore, a decline
in airline travel will typically have a direct adverse impact on our results of operations. Significant airline capacity
reductions, airfare or related fee increases, any events that disrupt or reduce business or leisure air travel such as work
stoppages, military conflicts, terrorist incidents, natural disasters, epidemic diseases, or the response of governments to any
of these events, could result in reduced air travel and have an adverse effect on our results of operations. Significant increases
in fuel prices, a severe protracted disruption in fuel supplies or rationing of fuel could discourage customers from renting cars
or reduce or disrupt air travel.
Our truck rental business can also be impacted by the housing market. If conditions in the housing market were to weaken,
we may see a decline in truck rental transactions, which could have an adverse impact on our business.
We may not be successful in implementing our business strategies.
For 2013, our objective is to focus on growing our business profitably, strengthening our position as a leading provider of
vehicle rental services, continuing to enhance the quality of vehicle rental services we provide to customers, and maintaining
and enhancing efficiencies achieved through process improvement and other actions, including certain core strategic
initiatives, such as optimizing our two-brand strategy, expanding our revenue sources, capturing incremental profit
opportunities and controlling costs and promoting efficiencies. If we are unsuccessful in implementing these initiatives, our
financial condition, results of operations and cash flows could be adversely affected.
We rely on third-party distribution channels, and the success of our business may be affected by these relationships.
In 2012, we generated approximately 45% of our car rental reservations through third-party distribution channels, which
include:
traditional and online travel agencies, airlines and hotel companies, marketing partners such as credit card
companies and membership organizations and other entities that help us attract customers; and
global distribution systems, such as Amadeus, Galileo/Apollo, Sabre and Worldspan that connect travel agents,
travel service providers and corporations to our reservations systems.
Changes in our pricing agreements, commission schedules or arrangements with third-party distribution channels, the
termination of any of our relationships or a reduction in the transaction volume of such channels, or a GDS’s inability to
process and communicate reservations to us could have an adverse impact on our business, financial condition and results of
operations, particularly if our customers were unable to access our reservation systems through alternate channels.
Our business is seasonal, and a disruption in rental activity during our peak season could adversely affect our results of
operations.
Seasonal changes in our revenues do not typically alter certain of our expenses that are fixed in the short run, such as rent and
insurance, and typically result in higher profitability in periods when our revenues are higher and lower profitability in
periods when our revenues are lower. In our business, the third quarter of the year has historically been our strongest quarter
due to the increased level of leisure travel and household moving activity. In 2012, the third quarter accounted for 29% of our