DOW JONES NEWSWIRES 
 

Avis Budget Group Inc. (CAR) said it expects to reap big benefits from its cost cuts, with savings not related to its headcount now likely to exceed initial expectations, and added that automotive bankruptcies are likely to have only a minimal effect on its operations.

The car-rental industry has been hurt as consumers cut back on travel and tight credit makes it harder to buy and sell automobiles. The weak economy sent Chrysler Group LLC and General Motors Corp. (GMGMQ) into bankruptcy protection. In response, Avis, which had the largest U.S. market share in 2008, has been trimming costs, cutting jobs and consolidating its regional offices in the third quarter. Still, the company's first-quarter loss widened as net revenue fell 17% and the company took a small restructuring charge.

On Monday, Avis said it has found "incremental opportunities" to cut costs in field operations, information technology, contact centers and citation processing.

In all, the company expects annual savings of $200 million from its efforts.

However, the company said it sees double-digit percentage volume declines in the second quarter, but comparisons may improve in the second half of the year. In addition, Avis expects per-unit fleet costs to rise in the single digits in 2009.

Avis also noted it will adjust its fleet size to match demand, an effort that should be a little easier as the company said the used-car market is now performing well. The company said the asset-backed financing markets are normalizing, helped by the U.S. Treasury's stabilization programs.

Avis shares were up 2 cents to $4.81 in after-hours trading. The shares have rebounded very strongly from a low of 34 cents three months ago but are still down nearly two-thirds from a year ago.

-By Jay Miller, Dow Jones Newswires; 201-938-2331; jay.miller@dowjones.com