Dollar Thrifty sees flat FY revenue on weak rental rates

BANGALORE (Reuters) - Dollar Thrifty Automotive Group (DTG.N) posted second-quarter results below analysts' expectations, hurt by lower per-day revenue, and forecast 2011 revenue to be flat if per-day rental rates remained under pressure in the second half.

Dollar Thrifty, which was the subject of a takeover battle between rivals Avis Budget (CAR.O) and Hertz (HTZ.N), said the long-pending deal has kept it from moving forward on growth initiatives.

"Being in play for a couple of years is certainly wearing on our employees ... that's really where the frustration level that I feel day to day," Chief Executive Scott Thompson said on a conference call with analysts.

Hertz on Friday extended the date of a direct exchange offer for Dollar Thrifty to September 9.

On the growth outlook, the CEO said he expects volume growth to be offset by competitive price environment resulting in 2011 rental revenue in line with 2010 revenue levels.

Dollar Thrifty said the Japanese crisis impacted fleet levels and pricing in its latest second quarter.

"Since we do not have significant contracted business, we tend to be more impacted by short-term swings in rate movements," Thompson told analysts.

"The rate environment is improving in the third quarter, but it's still slightly negative to prior year."

Tulsa, Oklahoma-based Dollar Thrifty's quarterly results were in contrast to a strong quarter posted by rivals Hertz and Avis last week.

Avis Budget benefited from low fleet costs, while strong travel demand and lower vehicle depreciation costs drove Hertz' results.

Dollar Thrifty said it sold about 10,000 fewer vehicles in the second quarter, reducing quarterly vehicle gains by $9.7 million.

It expects the used car market to cool off in 2012 after an active 2011 due to the Japanese crisis.

"If for some reason the used car market doesn't pull back, then there would be certainly some upside to our fleet costs," CEO Thompson said.

Dollar Thrifty cut its full-year fleet cost outlook to $215-$225 per vehicle per month from $230-$240.

The company also raised its outlook for corporate adjusted earnings before taxes, depreciation and amortization (EBITDA) to $270-$290 million from $260-$285 million.

Shares of the company, which shed 20 percent of its value after touching a year-high in June, were down 7 percent at $62.88 in afternoon trade on the New York Stock Exchange. They touched a 19-week low of $61.70 earlier in the day.

(Reporting by Bijoy Koyitty in Bangalore; Editing by Roshni Menon, Maju Samuel)