Do These Results Mean Hertz Has Switched Gears?

Competitive pricing has long been a bottom-line bane for companies in the car-rental industry. But Hertz (NYSE:HTZ) — with newly implemented higher pricing — showed few ill effects from tough competition in its fourth-quarter results. Even though the company posted a loss for the quarter on Monday, CEO Mark Frissora called the results a “fast start” to the year.

For the three-month period, core earnings strengthened and revenue increased significantly. While the company did post a net loss for the quarter, it resulted from a move that was aimed at buttressing the viability of the company’s business in coming years. In the future, Hertz’s results will be fortified by its acquisition of its smaller rival Dollar Thrifty, a deal that was approved by the U.S. Federal Trade Commission in November and caused the company to report a quarterly loss $36.4 million, or 9 cents per share. That loss included a 24-cents-per-share charge related to the acquisition.

For comparison, the company recorded a profit of $47.1 million, or 11 cents a share, in the year-ago quarter.

The $2.3 billion acquisition of Dollar Thrifty is expected to save the merged company approximately $160 million annually and secure the number-two position in the global car rental rankings for Hertz, placing it just behind privately held Enterprise Holdings. Hertz fought Avis Budget Group (NASDAQ:CAR) for the Dollar Thrifty deal in order to expand its services further into the leisure car rental market, a segment of the industry in which Thrifty was flourishing. Within the U.S. commercial business, both Avis and Hertz had been struggling to attract more corporate customers by offering lower and lower prices…